On Wednesday, July 27, the US Federal Reserve System (FRS) raised the key rate range by 75 basis points at once, to 2.25-2.5%. The cryptocurrency market reacted with growth.
Recent months have seen steady job growth and low unemployment. Inflation remains high, reflecting supply and demand imbalances associated with the pandemic, high food and energy prices, and broad price pressures
the FRS said.
The department noted that the war in Ukraine increases inflation and puts pressure on global economic activity. The Fed intends to achieve maximum employment and return inflation to 2%.
Against the background of the increase in the key rate, bitcoin rose to $22,000. Ethereum is trading at $1,500.
At the same time, economic data suggests that the worst inflation is behind us. No important economic information is expected in August, and at the same time, the current profits of US companies are better than expected. All this gave confidence to investors and capital markets and growth stocks, with which cryptocurrencies have been closely correlated lately
Belyakov explained.
In March, the Fed raised its key rate to 0.25-0.5% for the first time since 2018. The traditional and cryptocurrency markets reacted to the decision with growth. Among digital assets, the local rally continued until April – Bitcoin, and Ethereum reached annual highs.
Recall that in May the Fed raised rates again. Contrary to forecasts, the regulator’s policy turned out to be softer – the indicator rose by 50 bp. p. (an increase of 75 bp was expected).
Against the background of the news, bitcoin overcame the $40,000 mark, but the surge in quotes turned out to be short-lived – on the same day, the price of the first cryptocurrency failed the $36,000 level, which was the beginning of a protracted correction.
In June, the Fed raised its key rate by 75 basis points for the first time since 1994. The indicator reached the level of 1.5–1.75%, to which bitcoin reacted with a short-term increase to $22,000, and then collapsed below $18,000.