Cryptocurrencies traded near three-months lows after Federal Reserve officials raised interest rates in line with forecasts, giving digital-asset investors a respite from this year’s bear market.
Bitcoin, the largest token by market value, was little changed at around $19,000 as of 4:01 p.m. in New York. Earlier this week, the price reached the least since the collapse of crypto lender Celsius in June, a level that was last seen in late 2020. Ether, Solana and Avalanche were mixed.
“Because it was as expected, there was a little bit of a sigh of relief there, but likely a temporary one,” said Katie Stockton, founder and managing partner of Fairlead Strategies, a research firm focused on technical analysis.
The MVIS CryptoCompare Digital Assets 100 Index is down this week, taking its losses for 2022 to about 60% compared with 21% for global stocks. The correlation between equities and Bitcoin is elevated and close to a record, a sign of how assets are being tossed around by common macro factors.
Crypto will still be “heavily correlated to macro and traditional markets,” said Shiliang Tang, chief investment officer at crypto asset investment firm LedgerPrime.
Fed Chair Jerome Powell said officials were “strongly committed” to curbing inflation after they raised interest rates by 75 basis points for a third straight time and signaled a potential move of that magnitude in November. Powell said his main message was that officials were “strongly resolved” to bring inflation down to the Fed’s 2% goal and added that “we will keep at it until the job is done.”
“If the Fed keeps tightening, unless it implements yield curve control to keep the curve positively sloped, the crypto system will see a lot more failures,” said Brian Pellegrini, founder of research firm Intertemporal Economics. “At the end a few very rich champions will emerge, but in the meantime there will be blood in the streets.”
This article was provided by Bloomberg News.