After a fairly positive end of the week, the bankruptcy and rescue of First Republic Bank by JP Morgan sent digital assets down hard, although in the last few hours they seem to have recovered.
The cryptocurrencies They operate with a downward trend this Wednesday, May 3, pending the interest rate decision of the Federal Reserve (Fed). Bitcoin and Ethereum have risen up to 3% in the last 24 hours and exceed US$28,000 and US$1,860 respectively. For their part, the rest of the cryptocurrencies fell to 4% led by Solana (SOL) and Ripple (XRT).
After a fairly positive end of the week, the bankruptcy and rescue of First Republic Bank by JP Morgan sent digital assets down hard, although in the last few hours they seem to have recovered. According to Edward Moya, a senior market analyst at Oanda, this is because the rapid The reaction of the US financial sector has made it more resilient in the eyes of investors. “It seems that the US banking system has a manual to deal with the next banking crisis when it arises, which in a way reduces interest in cryptocurrencies”, explains this expert.
For his part, fellow Oanda analyst Craig Erlam stressed that bitcoin remains unable to break major resistance at $30,000. According to Erlam, “it is not clear” if the latest pullback and the subsequent price action after the Fed’s decision will be enough to “put in a bind” those who expected a sustained recovery, but he stresses that a break below 27,000 dollars “could be a problem in the short term.”
In this sense, everything indicates that the Fed will opt for a rise of 25 basis points this Wednesday. This is what the market believes, represented by the 86% probability that the CME’s FedWatch tool gives that the US central bank will take interest rates to the range of 500-525 basis points.
Naeem Aslam, chief investment officer at Zaye Capital Markets, stresses that investors are now concerned about what the Fed will do beyond this decision. “There is no doubt that many believe that the Fed will start cutting interest rates towards the end of the year, but will we see any indication of this in today’s Fed commentary?” asks this expert, who also points out that the market is also waiting for some comment on the current banking crisis and “whether it is willing to take some of the blame.” “After all, the banking crisis only started because of aggressive monetary policy,” adds.
In this regard, some US politicians have formally asked the Fed to abandon this upward path to give the economy a breather. Among them are, according to various reports, the Democratic senators Bernie Sanders and Elizabeth Warren, who would have written a letter addressed to President Jerome Powell in which they point out that the banking crisis and the accumulated rate hikes leave the first economy in the world “ more vulnerable to an overreaction by the Fed.”
Source: Ambito
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