Why has the crypto market risen today?

All eyes are on the Federal Reserve

The price of the largest crypto coin, Bitcoin, has finally passed the $17,000 mark since Sunday. At the time of writing, the price is even at $ 17,380. That is its highest point since December 2022.

Despite the strong performance of the crypto market in recent times, it remains to be seen whether the upward trend will last for a long time. This is because investors seem to be anticipating the Federal Reserve’s statements, which will clarify what the US central bank will do with interest rates.

According to many analysts, the aggressive interest rate hikes that the Fed has implemented in recent months seem to be finally coming to an end. They still expect an interest rate increase, but a lot less than we have seen before. That would be good news for both the global stock markets and the crypto market. However, if interest rates are raised again, that would be a major damper for stock and crypto prices.

Will the Fed phase out rate hikes?

High inflation was a major problem in the year 2022 and this inflation caused central banks around the world to raise interest rates. However, recent economic data (PMI) may persuade the US central bank to taper interest rate hikes. If inflation were to level off, as the PMI data might suggest, the Federal Reserve chairman could finally start to ease rate hikes.

According to CME Group’s FedWatch Tool, February’s Federal Open Market Committee (FOMC) is currently expected to yield a 25 basis point increase, not the 50 basis point increase we saw previously. That would be good news. Below, in Chart 1, you can see that there is a 77.2% chance that interest rates will be raised to 450-475 basis points and only a 22.8% chance that they will be raised to 475-500 basis points.

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