The FED’s intention to raise general interest rates was already known to many. Recently, the Fed has announced the rise in interest rates by 75 basis points for the fourth consecutive time. As a result of the decision, stock markets gave up their gains and plunged sharply. However, cryptocurrencies have resisted.
The Dow Jones Industrial experiment a decrease of 505 points, which is approximately 1.6%. The S&P 500 was down 2.5% and the NASDAQ Composite fell 3.4%. Nevertheless, all three indices have almost immediately turned green right after the FED announcement.
Inflation rates have been at an all-time high over the course of 18 months. Therefore, markets were reminded that interest rates would not be lowered for an unspecified time. However, the Fed’s decision was perfectly in line with what was previously expected. The central bank is actively trying to fight inflation by reducing economic demand. This could send the market into a prolonged downturn.
Cryptocurrencies Continue to Maintain Support Levels
Rising interest rates are known to play a critical role in impacting both demand and inflation rates. This means that the Fed believes that inflation rates are likely to decline by a significant percentage, giving the central bank the opportunity to slow the pace of interest rate hikes.
Considering this increase, the cryptocurrency market has managed to remain stable. Previously, the crypto market had to face an immediate shock whenever the Fed raised interest rates. Despite this stability, things are expected to get worse over the next few days. Many cryptocurrencies, including the Bitcoin, can drop drastically.
Many experts believe that Bitcoin could drop to around $10,000 if things take a turn for the worse. There is a sizable percentage of people who plan to hold cryptocurrencies for long periods of time.
Over the course of the last few years, the total number of people who have gotten into crypto has grown considerably. These long-term holders are lending a hand to keep prices stable at the moment. The next few days are critical for cryptocurrencies as they will decide the long-term market trend.
