Scan to Download ios&Android APP
ETC to USD
Response surprises analyst
Sell-off was anticipated
ETH to USD
Ethereum Classic up 14%
BTC on the rise
XEM to USD
Is crypto a hedge?
Still a risk asset
Further adoption ‘inevitable’
By Monte Stewart
23:16, 27 July 2022
Updated
Cryptocurrency prices rose across the board Wednesday as the US Federal Reserve introduced another interest-rate hike.
Altcoin prices and bitcoin jumped as the Fed maintained its tough stance against inflation, raising its benchmark interest rate by the expected 75 basis points.
The sweeping crypto price gains resulted after two straight days of widespread declines amidst uncertainty about what the Fed might do.
“The response to the hike was a bit surprising and showed that investors might have been anticipating a 100-basis- points hike or some more hawkish language from the Fed, neither of which came to light,” Weiss Ratings analyst Alex Benfield told Capital.com.
“Investors certainly were a little worried leading up to [Wednesday] as it seems like inflation has not cooled off in any realistic way and the reality that we are in a recession seems likely,” Benfield added.
According to Benfield the response to the hike was ‘surprising’ and showed that investors were anticipating a 100-basis- points hike.
“Investors certainly were a little worried leading up to [Wednesday] as it seems like inflation has not cooled off in any realistic way and the reality that we are in a recession seems likely,” Benfield said.
He said the sell-off that occurred Monday and Tuesday in advance of the rate hike was not a surprise.
“There were multiple events that the market had been anticipating this week, first and foremost [Wednesday’s] Fed announcement,” he said. “Investors certainly were a little worried leading up to [Wednesday] as it seems like inflation has not cooled off in any realistic way and the reality that we are in a recession seems likely.”
Ethereum Classic (ETC) was up about 14% around the time that conventional markets closed in North America on Wednesday. Ether (ETH), also backed by the Ethereum blockchain network, climbed 8% and surpassed $1,600. FLOW, up 9%, and Nem (XEM), which saw an 8% rise, were also among the biggest gainers.
(All crypto increases based on CoinMarketCap data.)
Bitcoin approached $23,000 as it rose 3%. The world’s largest cryptocurrency continued to climb in the afternoon after traditional markets shuttered.
GME
AAPL
GOOG
TSLA
As has often been the case since January, crypto’s upswing was in line with stock market and macroeconomic trends.
Following the Fed’s decision, all three major US benchmarks – the Dow Jones Industrial Average and the S&P 500 – were in the green, while the NASDAQ 100 led the indices’ rebound.
Bullish Bearish
79% 21%
You voted bullish.
You voted bearish.
Give BTC/USD a try
Crypto enthusiasts have often claimed that digital coins offer a hedge against inflation. Many investors in Argentina and other parts of Latin America prefer bitcoin and other crypto assets over fiat, or traditional money, due to inflation and lack of trust in traditional currency.
However, Benfield said crypto’s strengths as a hedging tool have yet to be realized.
“The crypto-inflation-hedge narrative certainly seems a bit battered at this point, and it’s safe to say that in the short term crypto is not the best inflation hedge and is still treated as a risk asset,” he said.
“That might be due to the increase in institutional holdings – those holders will tend to treat crypto as a regular risk asset and squeeze their investments for cash when times get scary.
Now, crypto as an inflation hedge over the long term is still up in the air and, in my opinion at least, has a far better chance of coming true over the course of the next decade.”
With the world facing multiple years of higher-than-usual inflation, he believes that further crypto adoption is inevitable as more people start to realize the benefits of an asset that “can’t be manipulated and inflated away by government control.”
But continued crypto price increases are from certain this week as the US prepares to release GDP data on Thursday and more economic outlooks are set for release elsewhere.
“The week isn’t over yet, so I would expect some more volatility as things play out,” said Benfield.
Why Capital.com?
Simple and intuitive platform
No commission
Competitive spreads
Most traded
New to trading? Learn to trade with Capital.com
Join the 415.000+ traders worldwide that chose to trade with Capital.com
1. Create & verify your account
2. Make your first deposit
3. You’re all set. Start trading
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 83.45% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Risk Disclosure Statement
The value of shares and ETFs bought through a share dealing account can fall as well as rise, which could mean getting back less than you originally put in. Past performance is no guarantee of future results.
Risk warning: transactions with non-deliverable over-the-counter instruments are a risky activity and can bring not only profit but also losses. The size of the potential loss is limited to the funds held by us for and on your behalf, in relation to your trading account. Past profits do not guarantee future profits. Use the training services of our company to understand the risks before you start operations.
Capital Com SV Investments Limited is regulated by Cyprus Securities and Exchange Commission (CySEC) under license number 319/17. Capital Com SV Investments Limited, company Registration Number: 354252, registered address: 28 Octovriou 237, Lophitis Business Center II, 6th floor, 3035, Limassol, Cyprus.
Start trading on ETC/USD now.