- Highest rate since the 2008 financial crisis; dollar at 2-decade high
- Bitcoin, Ether fall, XRP rallied by over 4%
- More hikes likely this year
Price of bitcoin fell after the Fed chair announced the 3rd ‘3-quarter point’ hike in the Federal Funds rate (FFR) on Wednesday at 2 pm (ET). A 3 quarter point hike (or) 75 basis points hike is huge as this sets the interest rate at 3.25% from 3%. The previous two hikes were on June 16th and July 28th. Earlier this year, a 50-point and a 25-point hike were also announced.
The largest crypto by market cap and market dominance, Bitcoin, fell below the $19500 mark. Ethereum also took a hit, falling by 5.41% post announcement. Both coins are gaining steadily, however, they have not crossed pre-announcement levels. When this was being written, BTCUSD traded at $19150 and ETHUSD at $1290; both climbed over 3% the next day.
XRPUSD slashed 1.78% post announcement. Interestingly, it gained by 4.2% after 15 minutes and another 4.2% immediately. At the time of writing, it is 6.5% higher than pre announcement level.
Key market indices fell on September 21st: Dow Jones Industrial Average lost 522.45 points (1.7%); S&P 500 fell by 1.7%; and NASDAQ Composite fell by 1.79% soon after post announcement.
After Putin announced a historical military mobilization in Ukraine, the dollar climbed significantly. The Dollar index, which measures the US dollar’s strength against 6 other currencies, was at a 20-year high.
ALSO READ – Solana (SOL) is Likely to be Potential Ethereum Rival: Raoul Pal
Federal Open Market Committee or FOMC, is the principal body that guides monetary policy in the US. Chairman Jerome Powel explained that inflationary pressures were persistent and that there may be more hikes this year. He made it clear that there will be no decrease in the rate until the inflation rate
Central banks have been raising interest rates in the past year and a half. This is because of persistent inflation rates. The Fed has a dual mandate: maintain price stability and maximize employment. The FFR is one of the tools that Fed uses to achieve this goal.
Source: https://www.thecoinrepublic.com/2022/09/22/fed-rate-hike-3rd-consecutive-75-basis-points-this-time-cryptos-matching-tune/