- Bitcoin and other altcoins are currently in a consolidation mode as the interest rate decision from the US looms.
- Positive growth outlook pronounced by top market experts.
Disregarding the current broad dip in the cryptocurrency market, digital assets like Bitcoin (BTC), Ethereum (ETH), Binance Coin (BNB), and even Ripple’s XRP have performed better than general expectations this year. With the bear market of 2022 which was further intensified by the implosion and bankruptcy of FTX, the price of BTC sank significantly with the coin fluctuating between $15,000 and $16,000 at the time.
At the beginning of this year, the leading cryptocurrency saw a breakthrough which pushed its price to around $21,000 and this marked the coming of a new era for the coin. Since this year started, the BTC price has gained up to 70% to resound commitments from market bulls. Consequently, ETH, XRP, BNB, and other digital assets have been influenced positively by this bullish price gain.
Presently, XRP is trading at $0.5114, up by 0.45% in the past 24 hours according to data from Markecap. To counterbalance this current resurgence, ETH has lost 1.15%, trading at $1,627.44 and BNB is currently worth $215.70 after hitting a 1.24% dip in its valuation.
To ultimately consolidate this bearish trend, Bitcoin is currently trading at $27,082.68, down by 0.46% in the past 24 hours. Amongst many factors, Bitcoin has defied the numerous interest rate hikes that the Federal Reserve has enforced in order to combat soaring inflation.
Fed Reserve Interest Rate Hikes Threatens Crypto Assets
Since March 2022 when the Federal Reserve and its Chairman Jerome Powell began its statutory interest rate hike, the action has been performed more than ten times already. In mid-June, the Central Bank announced a pause after borrowing costs soared to 5.25%. The announcement triggered a bearish movement for BTC and for the first time since early March, it dropped below $25,000.
Looking at the resulting effect of the action, some analysts are hopeful that the Fed will halt interest rate hikes in September. Jan Hatzius and David Mericle, two analysts from Goldman Sachs shared their optimism about the Federal Open Market Committee (FOMC) and concluded that the final interest rate hike expected this month is not necessary especially as the inflation trend has slowed down.
As the time for another decision comes, investors are concerned about whether the Federal Reserve will hike or maintain a hold at its interest rate decision meeting this week. Matteo Greco, a research analyst at crypto investor Fineqia International, confirmed that many investors have already priced in with certainty that interest rates will remain on hold. There is still a high likelihood that the Federal Reserve may defy market expectations of a “hold” and raise rates again.
Arthur Hayes Theory on Bitcoin
Unlike other analysts, Arthur Hayes, the former Chief Executive Officer (CEO) of BitMex exchange who also doubles as a legendary crypto trader, believes that an additional hike in interest rate will push the price of “risky financial assets” like Bitcoin further up.
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Hayes based his argument on the fact that these financial assets will remain a very attractive proposition for investors when the government drives GDP high. He went on to refer to Q3 GDP growth as a “mind-bogglingly massive” 9.4% compared to the two-year U.S. Treasury yield of 5%.
In all, the future growth potentials of the crypto market are hinged on a limited number of macroeconomic considerations that are largely controlled by the US Federal Reserve and as such, crypto traders need to keep their watchful eyes on.