How does the Fed influence the crypto market?

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Last Wednesday, a meeting of the US Federal Reserve System (FRS) on the rate was held. The regulator raised it by 75 basis points – from 2.25-2.5% to 3-3.25% per annum. Up 75 bp takes place for the third meeting in a row. The increase in rates is associated with high inflation, which has reached a maximum over the past 40 years, writes RBC Crypto.

Immediately after the Fed meeting, the bitcoin rate first rose sharply and approached the $22 thousand mark, after which it fell below $19 thousand and reached a three-month low at $18.1 thousand. As of September 23, 12:50 Moscow time, the cryptocurrency is trading at at $19 thousand

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Bitcoin fell on Wednesday as market participants sold off risky assets in response to the Fed’s rate hike, BitRiver financial analyst Vladislav Antonov explained. He added. that market participants reacted by selling risky assets. Since the cryptocurrency market correlates with stock indices, bitcoin also sank.

The next meeting of the US Federal Reserve will take place on November 1-2. A 1.25 percentage point rate hike is expected for the remaining two Fed meetings in 2022, which suggests another 75 basis point rate hike, according to the CME.

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“Markets are gradually recovering, and it is very important how the US market closes on Friday. Friday’s close will determine how Bitcoin trades over the weekend. Sellers control the market, so buyers need to tighten up to change the bearish mood, ”the expert warned.

According to him, in order for the recovery of the BTC/USDt pair to accelerate, it is necessary to pass the $21,000 level. At the same time, there are high risks of going below $18,000, they are more than 70%, the analyst believes.

Roman Nekrasov, co-founder of the ENCRY Foundation, agreed with him. He noted that the next increase in the rate knocked down the opportunities of the bulls in the crypto market, and by the end of the year there were few prospects for significant growth, even up to $30,000, for bitcoin.

“I believe that the Fed will still raise the rate before the end of the year, and this will hit the stock markets, stocks of technology companies and cryptocurrencies,” the specialist added.

Geopolitical tensions and the energy crisis also do not contribute to the resumption of growth, Nekrasov stressed. He suggested that Bitcoin will return to growth in the second half of 2023, when the crypto market experiences positive momentum from the upcoming halving.

“Based on previous halvings, moderate growth will begin six months before the event, that is, in the fall of 2023, and the main bullish cycle will occur in the period 12-18 months after the halving, that is, in the second half of 2024 and the first half of 2025,” concluded the expert.

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Source: Cryptocurrency

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