Bitcoin, Ethereum Dip After Fed Hints at More Rate Hikes

MARKET_WATCH

Crypto

Crypto and stocks saw a decline after the U.S. Federal Reserve reaffirmed its aims to bring inflation down to its 2% target.

 

Bitcoin slipped below $29,000 early Thursday alongside stocks after the U.S. Federal Reserve suggested maintaining its hawkish stance in the meeting minutes released on August 16.

Bitcoin dropped by 2% overnight and is now trading at $28,549. 

 

The downturn dragged the broader crypto market down with it, as the total market capitalization dropped by 1.7% overnight, or nearly $20 billion, per CoinGecko.

 

Ethereum price is also struggling to hold on to the $1,800 support level, last trading at $1,795 after dropping 1.5% in the last 24 hours.

In the equities market, the S&P 500 index continued its downturn from Tuesday, dropping 0.76%.

The dollar index (DXY) against other major currencies gained 0.54% this week from Fed’s rate expectations, hitting a one-month high yesterday.

 

Inflation fight far from over, says Fed

During the Fed policy rate meeting last month, it increased the benchmark interest rate to a 22-year high, bringing the interest rate to 5.25%-5.50%.

Many expected that the rate hike would be one of its last after an aggressive increase from zero percent in March 2022 in its attempt to stomp out rampant inflation.

 

The central bank's rate hikes have been one of the most significant factors limiting the rise of risk assets such as stocks and cryptocurrencies.

The higher borrowing costs stifle growth and expansion and attract investors to safer bets like Treasury bonds. It’s also one of the key tools the Fed has in its arsenal to cool rising consumer costs.

 

However, the latest meeting minutes show that the Fed’s decision-making committee “remains highly attentive to inflation risks.”

The document also stated that the job sector outlook was positive, with “robust” job gains and a low unemployment rate.

The market’s expectation of a rate hike has increased after the release of the minutes.

CME’s FEDWatch tool shows that traders increased their rate hike expectations from 10% to 13.5% after the release.

A table showing probabilities.

CME FedWatch Tool. Source: CME Group.

The press release added that the Fed might consider enacting policies “that may be appropriate to return inflation to two percent over time.”

 

 

Source : [Bitcoin, Ethereum Dip After Fed Hints at More Rate Hikes](decrypt.co/152767/bitcoin-ethereum-dip-after-fed-hints-more-rate-hikes) by Nivesh Rustgi - Decrypt by Nivesh Rustgi / August 17, 2023

rayn.finance logo

Automata FRANCE SAS

240 rue Evariste Galois,

06410 Biot,

Sophia Antipolis

Automata Pay

65-66 Warwick House 4th

Floor, Queen Street, London

England, EC4R 1EB

Automata Pay Europe Ltd

3rd Floor Ormond Building,

31-36 Ormond Quay Upper,

Dublin 7, D07 Ee37

Automata ICO Ltd

Italian Branch

Via Archimede, 161,

00197 Roma

Italy

The purchase of digital assets is subject to a high market risk and price volatility. Changes in value can be significant and occur rapidly and without warning. Past performance is not a reliable indicator of future performance. The value of an investment and returns can fluctuate both up and down, and you may not recover the amount you invested. RISK WARNING

Automata ICO Limited has a branch in Italy with its registered office at Via Archimede, 161, Roma, Italy, and registered in Italy under number 96550860587 with the Organismo Agenti e Mediatori (OAM) as a Virtual Asset Service Provider (VASP).

Automata France SAS is a company registered in France with the company number 902 498 617. Automata FRANCE SAS is registered with the french Financial Market Authority, l’Autorité des marchés financiers (“AMF”), as a provider of Virtual Asset Service Provider under number E2023-087.

Automata Pay Europe Limited is a partner of Modulr Finance B.V., a company registered in the Netherlands with company number 81852401, which is authorised and regulated by the Dutch Central Bank (DNB) as an Electronic Money Institution (Firm Reference Number: R182870) for the issuance of electronic money and payment services. Your account and related payment services are provided by Modulr Finance B.V. Your funds will be held in one or more segregated accounts and safeguarded in line with the Financial Supervision Act. How we keep your money safe.