Digital assets boost regardless of Fed announcing interest rates hike

• Earlier this year, the Fed announced its interest rate hike and about ending the bond purchase of Pandemic time.
• The announcement directly affected the performance of crypto assets and global shares.
• 2021 was a significant year for the crypto industry, and even after the interest rate hike announcement, they are witnessing a surge.

Last month, the US Federal Reserve highlighted interest rates hike three times in 2022, resulting in a surge in leading cryptocurrencies. 

Bitcoin went from $47,800 to $49,000 post announcement by the Fed, and Ethereum went from $3,810 to $3,922. When the Fed signified stopping Covid 19 era bond purchasing by the first quarter of this year, global shares also witnessed a price increase. 

The Fed’s announcement took note of the inflationary developments and labour market improvements. The Fed decided to reduce its net purchases of Treasury Securities by $20 million and agency mortgage-backed securities by $10 million. 

The Fed’s meeting and announcement brought a surge in the market index US S&P prices, which was trading up by 0.4% in just 10 minutes of the meeting. Similarly, after the announcement, Morgan Stanley Capital International(MSCI) stocks went up by 0.10%. 

According to Jerome Powell, the chair of the Fed meeting, inflation is running above the two percent set goal and might continue to do so in the future. He further added that the Fed aims to focus on price stability and use the tools to prevent inflation. They would not let inflation get rooted in the US economy. And if we look from the financial stability terms, he does not see cryptocurrencies as a threat to the financial system. 

Although he did suggest that investors be well aware of the digital assets they are investing in, as the crypto industry is subjected to volatility. 

Last year, the crypto industry saw significant changes like:

Bitcoin fell massively from it’s All-time high in April, which was around $64,000, after which it went gradually down in the months following. And in July, the price fell below $29,000, which was its 52 week low, leading to a loss of more than 50% in just a few months. 

Elon Musk, the CEO of Tesla, is quite indulged in the industry of cryptocurrency. Last year in February, he tweeted about Dogecoin, which increased the coin’s value by 60% and led to many people investing in the meme coin. It eventually emerged as one of the top ten performing cryptocurrencies of the year.

In October 2021, the US securities and exchange commission allowed the Bitcoin strategy ETF to go public. It was the very first time that Bitcoin futures started publicly trading. Investors can learn about the asset class’s volatility by investment in Bitcoin futures, even if they cannot directly invest in Bitcoin. 

Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.

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