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Cryptos Pop Then Retrace Following Fed Statement -Breaking

by Mike Robinson

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After Fed Statement, Cryptos Retrace and Pop Following Fed Statement

Wednesday afternoon, the Federal Reserve published its final Federal Open Market Committee Statement (FOMC) for the year. According to the announcement, the Fed would reduce its monthly bond purchases of Treasury securities and mortgage-backed securities by $30 billion. The goal of this tapering is to work toward ending its bond-buying purchase program in March 2022 – a full quarter sooner than previously announced.

In 2022, the Fed opened up three rates hikes to its Federal Funds Rate. This is instead of just one. In order to ensure that bank lending is consistent, the Federal Funds Rate will be used as the base rate. This means consumers who have credit cards or car loans, variable-rate mortgages and other types of borrowing, are likely to see very high rates.

Jerome Powell, Fed chairman, stated the reason for the actions is that inflation has trended higher than their 2% target over several months. New jobs have averaged 370,000 per monthly, which, the Fed believes, are indicators of strong economic growth.

After the FOMC statement was released, Fed Chairman Jerome Powell stated in a live press conference that he and FOMC acknowledge the impact their monetary policy has on the average consumer.

“We understand that our actions affect communities, families and businesses across the country. All we do serves our public mission. We, at the Fed, will do everything we can to complete the recovery in employment and achieve our price stability goal,”
Powell stated.

Following the Fed’s announcement at 2p.m. Around 2pm EST the price of crypto-space increased by an average of 5% immediately. This has since been reversed in the 1-hour perspective. The pump, however, was sufficient to lift the 24 hour pricing averages for 9 of the top-10 cryptos (per CoinGecko.com).

To The Flipside

  • The Fed news triggered a surge in stock and cryptocurrency markets that exceeded 5%.
  • It’s interesting to see both those sectors move in tandem – it implies that cryptocurrencies are still correlated to traditional finance and not yet decoupled.

What are the reasons to care?

Inflation can cause consumers to suffer as well as accelerated interest rates. To avoid credit rate increases next year, it is best to pay off your credit card debt quickly.

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