What is happening on Crypto Market now?
Crypto and equities erased some of their summer gains. Bitcoin ended the week lower by almost 15%, closed at around 20.877 on Friday, while NASDAQ closed at 12.705, a more than 2% drop compared to the previous week’s close.
ETH also lost its ground by more than 17% closing at 1.613. The selling pressure came because of the FED Minutes, published on August 18th, 2022, indicated the FED will prioritize fighting inflation ahead of US economic growth for longer than some investors had hoped.
This means, higher rates will be in place for longer time even if the US economy falters into a deeper recession, delivering a blow to more optimistic investors across both crypto and equity spectrum.
The FED raised interest rates by 75 basis points to 2.5% on their last monetary policy meeting in July 2022. We expect they will raise again in September, targeting 3.5–3.75% by year end, before beginning to cut them in the second half of 2023. The US is already in recession, as its last quarterly GDP contracted for the second straight quarter, declining by 0,90%.
The US CPI for July 2022 dropped to 8.5%, dropping from 9.1% month earlier, as inflationary pressures eased on the back of lower petrol prices. However, the lower reading is unlikely to persuade the FED to back off with monetary policy tightening.
On the other hand, UK’s inflation stood at more than 10% in July 2022, the highest level in over 40 years and the highest rate among G7 countries. Citi expects the UK inflation to climb up to 18.6% in January 2023 — the highest peak in almost half a century. Likewise, Germany’s central bank warned that interest rates need to keep raising as inflation is expected to go above 10% — a 70-year high and will remain elevated well into 2023.
Source: Yahoo Finance
US Fund Rates
Source: Board of Governors of the Federal Reserve System (US) — shared areas indicate U.S. recessions.
Overall, the crypto market sentiment (measured by Crypto Fear & Greed Index) still at 29/100, indicating fear continues to prevail. The total crypto market cap was roughly $1 trillion, dropping by more than 10% from a week before. ETH continues to outperform, with its 19% share, while Bitcoin keeps on losing.
Next to Watch out for: September 13th, 2022, we will get US CPI measure for August 2022. The next monetary policy meetings are scheduled for September 08th, 2022 for the ECB and September 20–21st, 2022 for the FED. Both are expected to hike rates further. ETH Merge is scheduled for September 19th, 2022.
Remember, the market tends to be 1-step ahead of any major event, so do not miss new opportunity and stay alert of the market developments. It will be important to remain selective on your investments during this monetary policy shift, and as it is with every market correction, be ready to enter the market at much lower valuations.
Know when to enter the market — be ready — get more insights, trends, and research reports at altFINS.com.
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