- The Federal Reserve, in their latest meeting, increased the interest rate by 25 basis points. But this is a much-anticipated hike in interest rates.
- However, it took the borrowing cost to a 22-year high. On the other hand, the crypto industry seems to react positively to the new rate hikes.
- In fact, top cryptocurrencies like Bitcoin, Ethereum, Cardano, and Dogecoin increased in price. It wasn’t a massive bullish trend, but it is significant.
The US Federal Reserve on Wednesday approved a new Fed interest rate hike. However, this recent hike represents many things for many industries, including crypto. Although many anticipated the new hike, it takes borrowing costs to the highest level in 22 years. On the other hand, the crypto industry reacted favorably to the hike. Top cryptocurrencies rose by certain percentages after the rate increase. Tokens such as Bitcoin, Ethereum, and Dogecoin increased upon the announcement.
More Details On the Fed Interest Rate Hike
Federal Reserve Chair Jerome Powell spearheaded the approval of new interest rates. Furthermore, the Fed conference had its good and bad. Jerome Powell says the federal government still has a long way to go. This is because many of the targets they set aren’t achieved. Especially for inflation, the Fed is still miles away from its target.
Nevertheless, Jerome Powell says they made some progress with their policies. But many think otherwise. According to Joe Brusuelas, U.S. chief economist at RSM, the Fed should give the economy some breath with interest rate hikes.
“It is time for the Fed to give the economy time to absorb the impact of past rate hikes,” Brusuelas said.
Will There Be A Fed Interest Rate Hike in September?
In the Fed’s next meeting in September, Powell says it isn’t clear whether there will be a rate hike. Hence, the interest rate in September might increase or remain the same.
Powell said:
“I would say it’s certainly possible that we will raise funds again at the September meeting if the data warranted. And I would also say it’s possible that we would choose to hold steady and we’re going to be making careful assessments, as I said, meeting by meeting.“
Cryptocurrencies React to Interest Rate Hike
Crypto is a major financial market to watch out for, especially during rate hikes. This is because many of the Fed’s policies will affect the crypto market. But for this recent rate hike, many cryptocurrencies reacted positively. In fact, some of them are still bullish several hours after the announcement.
The apex cryptocurrency, Bitcoin, made big moves as it is close to increasing by 1% in a day. Ethereum is also bullish, up by more than 1%. On the other hand, Cardano is one of the biggest movers after increasing by almost 3%. However, Dogecoin took a slump, but it is still bullish. Perhaps, Solana was the biggest surprise with more than a 7% increase.
In conclusion, the majority of the crypto market stays bullish about the Fed interest rate hike. Despite the Fed borrowing cost increasing to a 22-year level, things look good for the crypto market.
Featured image from Pixabay
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