The declines are led by Avalanche, Solana (-4.4%) and Cardano (-3.1%).
The cryptocurrencies They start the month on the wrong foot and register drops of up to 5% in the last 24 hours. Bitcoin loses 1.3% in the last 24 hours and is trading at $42,000 due to the decision of Federal Reserve (Fed) interest rates. Meanwhile, Ethereum is selling 1.6% to $2,200. The declines are led by Avalanche, Solana (-4.4%) and Cardano (-3.1%).
Bad investor mood after the Fed’s decision to maintain rates
The Fed’s latest monetary policy decision does not investors have finished liking it. The US central bank met expectations by leaving interest rates at 5.25%-5.5%, but disappointed investors saying he won’t cut rates until he is “more confident” that inflation is getting closer to his 2% target.
“Almost everyone on the Committee believes that it will be appropriate to reduce rates. We believe that our policy rate is probably at its peak for this tightening cycle, and that if the economy evolves as expected, It will probably be appropriate to begin restructuring the political constraint at some point this year.“he highlighted Jerome Powellpresident of the organization, in the subsequent press conference.
At the same time, Powell highlighted that, to lower rates, the members of the Federal Open Market Committee “we want to see more good data, we want a continuity of the good data that we are seeing,” since “inflation remains too high and progress in reducing it is not guaranteed”.
What is the analysis that the market does?
Michael Hewson, chief market analyst at CMC Markets in the United Kingdom, notes that the tone of the guidance “was leaning very much against the prospect of a rate cut in March, a line that Powell held very close.” “At the press conference Powell faced a variety of questions, but the one that moved markets the most was when he said he thought a rate cut was unlikely in March, and not the Fed’s base case, which took yields off the lows of the day, and sent stocks to the lows of the day,” the expert added. Those were the words that did the most damage to crypto assets , since they reduced the appetite for investor risk.
For its part, Ipek Ozkardeskaya, senior analyst at Swissquote Bank, emphasizes that Powell “wanted to make it clear” that a rate cut in March is “unlikely”. “Still, activity in Fed Funds futures gives about a 65% chance of a rate cut in March, as yesterday’s banking concerns play in favor of a rate cut sooner rather than later. But let’s remember that the last time the US suffered a decent banking stress, the US economy didn’t slow down. Or, if it did, it continued to grow above average,” adds this expert.
Cryptocurrencies.webp
On the other hand, FTX has announced that it hopes to settle its debts with all creditors, but also that it will not reopen its ‘exchange’ after the bankruptcy suffered in November 2022. “No investor is willing to commit the capital needed to restart the offshore exchange, nor has a buyer emerged for it as a going concern. The costs and risks of creating a viable exchange from what Mr. Bankman-Fried left in the container were simply too high,” said a lawyer for the FTX Creditors Committee at a court hearing.
Source: Ambito
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