U.S interest rate hike, what it means for Crypto
The U.S. Federal Reserve has raised the interest rate by 25-basis-points (bps) with clues that there is a probability that the next FOMC interest raising by 25 bps on June 14 will be 68%. However, CME stated that there is a 31% probability of putting a stop to the rate hike.
According to a report, 80% of chief economists at the World Economic Forum believe that central banks face the challenging task of balancing inflation management and financial sector stability. The economists anticipate that the central banks will find it difficult to bring down inflation to their target levels.
According to Arthur Hayes, the co-founder and former CEO of BitMEX, investing in assets outside of the traditional finance system is the only way to preserve investors’ capital.
Hours after the rate hike and the Fed Chairman Jerome Powell calling the banking system sound and resilient, U.S regional bank shares plummeted including PacWest Bancorp (52.5%), Western Alliance Bancorp (22.4%), Metropolitan Bank (16.2%) and HomeStreet (7.8%). Acquire.Fi reported that cryptocurrency is gaining momentum following the price tumble and suggested that it could be a good time to hold on to one’s investments (HODL).
The interest rate approved on Wednesday is the Fed’s 10th interest rate increase over a year. The target range of 5%-5.25% is the highest since August 2007. The rate sets bank charges on each other for overnight lending, however, extends to consumer debt products such as mortgages, auto loans, and credit cards.
Prominent Democratic lawmakers urged the Fed to stop rate hikes as it could cause a recession and excessive loss of jobs. Further, the U.S. will also release the April unemployment rate this week.
If key support levels are maintained, there is a possibility for an upward movement in Bitcoin and altcoin prices.
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