The cryptocurrency market saw a decline in value this week, primarily due to the Federal Open Market Committee’s decision to raise interest rates by 50 basis points. Bitcoin is currently trading at the $17,000 support, down nearly -4% for the day.
- The seventh consecutive interest rate hike brought another bout of negative market movements, as major U.S. equities traded in the red. Bitcoin and other digital assets mostly followed suit, as the total crypto market cap dropped -3.7% to $846 billion – a far cry from last year’s $3 trillion peak.
- The initial positive response to the release of U.S. inflation data was short-lived, as the market reacted negatively to a speech by Fed Chair Jerome Powell, who said that he believes people will be “bolting from stocks” before the downside accelerates.
- Despite the negative assessments, Powell added that such investors “are being too frantic.” However, senior Bloomberg analyst Mike McGlone sees the current situation as very dire, believing we are currently subject to similar market forces as during “the stock-market bubble of 1929.”
- As a result, major indices such as the Dow Jones, S&P 500, and Nasdaq Composite Index all saw a drop of around 2%, while the value of BTC/USD fell below $17,500 and ETH/USD declined over 5% in a 24-hour period.
- It is worth noting that so far this year, virtually every interest rate hike-related drop was followed by a market recovery. We’ll have to wait and see whether this time around will be the same.