Another Crypto Crash In November With Fed’s 0.75% Rate Hike?

As reports suggested that Fed could raise interest rate in November, Bitcoin showed early signs of crypto crash next month. The Fed officials are reportedly planning on another interest rate rise of 0.75 percentage point at their meeting between November 1 and 2. Also, the Fed is likely to debate during the meet on indicating a smaller rate hike subsequently in December. Meanwhile, Bitcoin (BTC) price dropped sharply on Friday following the reports confirming Fed rate hike in November.

December Hike Imminent?

The Federal Reserve officials appear to make borrowing expensive to slow down spending activity. According to a Wall Street Journal report, the officials want higher borrowing costs and lower asset prices. This is to slow economic activity by curbing spending, hiring and investment. The officials thereby plan on reducing demand and hence lowering inflation over a period of time. This plan has been evident from the comments made by Fed officials on various occasions in recent times. Meanwhile, it seems that the officials are keen on continuing the rate hike spree in December as well.

On the other side, a section of Fed officials are inclined at stopping the interest rate hike. In this context, it remains to be seen how the crypto market would react to the subsequent rate hike decisions. However, the potential easing of interest rate rise in early next year could possibly see Bitcoin stop correlation with the macro market. In the last few months, BTC remained stagnant at the $20,000 range. Experts view it as a reaction to the prolonged lull in the crypto market amid rising inflation concerns.

Crypto Crash Or Resistance?

In this context, the possibility of yet another crypto crash in November could be fatal to the market in current scenario. It is only in the last few weeks that the markets are encouraging showing signs of recovery. In a latest, experts are predicting that the cryptocurrency market is closer to the end of downturn. Rayne Steinberg, CEO of digital assets investment firm Arca, said recently that the market is closer to the end of the slump than not. Also, any divergence from the correlation in BTC could also mean a much awaited altcoin season. In the current scenario, there are more traders who are willing to take short term profits than hold position for long time. As of writing, BTC price stands at $19,053, down 0.80% in the last 24 hours, according to price tracking platform CoinMarketCap.

Anvesh reports major developments around crypto adoption and trading opportunities. Having been associated with the industry since 2016, he is now a strong advocate of decentralized technologies. Anvesh is currently based in India. Follow Anvesh on Twitter at @AnveshReddyBTC and reach him out at [email protected]

The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.