- The interest rate hike has previously affected cryptocurrencies badly.
- Bitcoin and Ethereum both saw price drops in September after the hike.
The WSJ reported on Oct. 21 that US Federal Reserve officials may be planning an additional interest rate rise of 75 basis points. The article also indicated that authorities will start making preparations to lower their interest rate by December. Officials will have a “thoughtful discussion about the pace of tightening at our next meeting,” as Fed governor Christopher Waller put it.
Fed Vice Chair Lael Brainard and other high-ranking officials have expressed concern that a continuous climb of 0.75 percentage points might eventually have an effect on the economy. But Loretta Mester, president of the Federal Reserve Bank of Cleveland, has already signaled that she would support a 0.75 basis points raise at the Fed’s next two meetings.
Impact on Crypto Sector
Authorities are clearly split on how their decision would affect the economy, as seen by these conflicting opinions. In each of its previous three sessions, the Federal Reserve raised the interest rate by 0.75 basis points. The last time the government agency raised interest rates by 0.75 percentage points was in 1994.
For as long as there has been a crypto market, the price performance has been affected by the Federal Reserve’s efforts to counteract the sky-high inflation. Bitcoin and Ethereum both saw price drops in September when officials disclosed the latest increase.
Since then, the price of Bitcoin has fluctuated between $18,000 and $20,500. Despite the excitement of the merge, Ethereum traded between $1,200 and $1,300. Besides the two most prominent digital currencies, the announcement also affected other cryptocurrencies badly.
Several companies involved in the cryptocurrency industry have declared bankruptcy and lost key executives as a direct result of the bear market the industry has been experiencing.
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