U.S. Fed crypto interest rate hike causes surge
On Wednesday, the U.S. federal reserve raised its interest rates by 75 basis points. It's the highest rate increase in 28 years, and it's part of a larger attempt to combat rising inflation, which has roiled the economy and markets, from stocks and bonds to cryptocurrencies.
According to a [statement (https://www.federalreserve.gov/monetarypolicy/files/monetary20220615a1.pdf) released by the Federal Open Market Committee (FOMC), which determines the Fed's monetary policy, the central bank will continue to shrink its balance sheet at the rate stated in May.
According to the Fed, the Fed Funds rate, which is the rate at which commercial banks can borrow and lend their excess reserves to one another overnight, would climb to a range of 1.5 percent -1.75 percent. According to Goldman Sachs, bond traders are pricing in a range of 3.25 percent to 3.5 percent by the end of the year, signalling an extremely quick and severe pace of monetary tightening.
After the announcement from the Fed crypto immediately reacted to the news. Following the news, bitcoin skyrocketed, hitting values above $21,000. It has bounced back from an 18-month low. Following a volatile week, altcoins like Solana and Cardano saw double-digit gains.
Ripple and BNB both increased by 9.8% and 7.4%, respectively, while Dogecoin, Polkadot, and Avalanche all had a double-digit short-term rise. They each gained 13.73 percent, 11.26 percent, and 14.59 percent.
At the same time, the price of Ethereum (ETH) increased by 6% to USD 1,180. Stocks followed suit, with the broad S&P 500 index climbing 0.17 percent in the first hour after the news was released.
According to CoinMarketCap, global capitalization increased by roughly 4% to $ 950 billion.
Final Thoughts on the Fed Crypto impact
According to crypto experts, the stock and crypto markets will remain turbulent in the near future due to concerns about inflation, the Russia-Ukraine war, and rising oil costs.
Author: Priya Kumari
Priya is a passionate content writer and the co-founder of Finendorse. She is an enthusiastic crypto investor and has a huge interest in the upcoming digitisation age.