The total cryptocurrency market cap increased by 7.5% in the last 24 hours, with investors taking yesterday’s 75 bps interest rate hike and today’s negative Q2 2022 gross domestic product (GDP) report in stride.
Key takeaways:
- The Federal Reserve (Fed) announced a second consecutive interest rate hike on Wednesday, raising the federal funds rate by 0.75% to between 2.25% and 2.50% range. The Fed hopes the hike will help bring down the 40-year high inflation.
- Bitcoin rallied by nearly 10% to above $23,300 post announcement. Ethereum saw an even bigger increase of roughly 12%. In total, 94 out of the top 100 cryptocurrencies recorded price increases in the last 24 hours.
- Similar to the majority of crypto assets, traditional markets have also rallied substantially. The S&P 500, the leading U.S. market index, improved by 2.6 percentage points. Several tech stocks, including Microsoft, Tesla, and Google, mustered over 5% price increases before the markets closed on Wednesday.
- The Federal Open Market Committee (FOMC) has acknowledged the broader economic slowdown in an official statement but highlighted the strong job market as the main reason for optimism. FOMC also said that it remains committed to bringing down inflation to a nominal rate of 2% and reiterated that it would employ additional rate hikes to achieve that goal.
- In addition to the FOMC meeting, the markets have had to contend with another important piece of news that came out in the last 24 hours. The Q2 2022 GDP report showed that the U.S. economy declined by 0.9% in the past three months, which marks the second consecutive negative quarter.
- Two consecutive quarters of negative economic growth are typically considered the deciding factor when announcing a recession. However, both the Fed and the Biden administration are pointing to the robust job market as the reason why the US is not in a recession.
