FED Raises Interest Rates – Bitcoin Is Going From Trading Tool To Asset

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2022-07-27 18:58:47

Market situation

BTC price rose slightly after the Fed’s clear announcement of its plans for financing and interest rates. Altcoins are also growing day by day.

US stocks also rose, with Nasdaq gaining the most with 3.19%. Futures were mostly flat after stocks rallied. Gold and oil also increased slightly after the information of the Fed.

After the BTC price increased within an hour, more than 20 million USD of leveraged orders were liquidated (shared by Onchain College). During the day, the liquidation value of leveraged orders was low.

However, the amount of leveraged orders on exchanges is still at an all-time high.

The number of BTC wallets continues to hit new highs. Long-term, the number of BTC wallets remains bullish.

And ETH in recent days has had a large number of withdrawals from Coinbase. Usually this is a sign of purchasing from large investment companies and institutions.

Fed announces 0.5% interest rate hike

The Fed officially announced a 0.5% interest rate increase in May. At the same time, from June 1, the Fed will start selling $30 billion in public bonds and $17.5 billion in real estate mortgage securities from the budget. After three months, the number of sales will double to reduce mortgage securities and bonds on the balance sheet.

In his speech, the Fed also clearly indicated the Fed’s tasks and directions in the coming time. The Fed emphasized that this agency is only responsible for price stability (inflation management) and job stability (low unemployment rate). Right now unemployment is low, the economy is fine, there are more jobs than job seekers. This means that demand is too high, needs to be reduced, and unemployment will remain low. When spending demand decreases, so does the rate of inflation.

Although there is some evidence that the growth rate of inflation is slowing down, it is not enough to influence the decision of the Fed. If things go as they are now, the Fed is likely to raise another 0.5% at its June and July meetings.

The Fed has ruled out a possible financial recession. However, payroll processing company ADP reported an increase of only 247,000 private payrolls in April. This was much lower than estimates for 390,000 and a significant drop from March, witnessed. ​the upwardly revised gain was 479,000. While recruitment demand is still increasing strongly, the shortage of labor supply causes companies to shrink and reduce production and service output. This will lead to a decline in the production of goods and a decrease in economic growth.

Facebook’s parent company sees challenges ahead because of Apple’s privacy changes, the war in Ukraine, and broad macroeconomic changes. Therefore, the company also plans to stop or slow down the rate of addition of mid- and senior-level personnel. In its earnings report last week, Meta forecast full-year revenue likely to decline in the second quarter.

Etsy and eBay reported better-than-expected first-quarter results. However, these two companies are also facing growing concerns that e-commerce companies will not be able to sustain the high growth they have enjoyed during the coronavirus pandemic. After two years of phenomenal growth, investors are bracing for a downturn, especially as the economy continues to reopen and consumers return to stores. After the release of the quarterly report, the shares of these two companies both fell.

Transportation companies like Lyft, Uber are similar. Despite better-than-expected 1st fund reports, the shares of these companies all fell after the announcement because of concerns about the trend of worse results in the second quarter. Lyft reported better-than-expected results for the whole line. above and below after the bell on Tuesday. However, the company gave gentle guidance for the second quarter and said it will have to continue spending on driver incentives due to soaring gas prices.

Bitcoin is gradually becoming a store of value

The latest Bloomberg Intelligence report in May discusses the adoption of bitcoin and other cryptocurrencies, the market, and the unprecedented advancements of monetary technology. The report also shows great potential for bitcoin to continue to do what it has been doing for most of its existence – outperforming most traditional asset classes.

The analysis points to Bitcoin as a standard risk asset by comparing it to the year-to-date (YTD) numbers through May 3 for the Nasdaq 100 Stock Index. -20% drop, while Bitcoin only dropped -15% during that time. Many technology stocks such as Netflix, Lyft, … have fluctuations of more than 30% within just one trading session. Bloomberg Intelligence suggests that this represents Bitcoin as a less risky asset.

Bitcoin is getting more and more mature and stable. With increasing adoption, the capitalization of BTC has very good growth potential. As investors become more and more concerned with the drop in stocks, Bloomberg believes that Bitcoin will be the asset that these investors will choose. Investors can get many benefits from BTC and crypto market.

Some other information:

  • The leading private bank in Liechtenstein – LGT Bank – has partnered with SEBA Bank to offer direct investments in digital assets to its clients. The first two digital currencies introduced by this bank were BTC and ETH.

  • Binance has been approved by regulators to operate its cryptocurrency exchange in France. The move makes France the first major European country to green light Binance. The company is supervised in Lithuania by the country’s anti-money laundering regulators and is also seeking registration with the Swedish financial watchdog.

  • Elon Musk changed his profile picture on Twitter to an image featuring various avatars from the Bored Ape Yacht Club’s NFT collection. ApeCoin, the token created by Yuga Labs on Bored Ape, surged 19% in an hour after Musk changed his profile picture.

  • British lawmaker Julian Knight sent Musk a letter asking him to appear in Parliament to discuss his proposal to buy Twitter. The government is looking to pass new laws requiring online platforms to handle harmful and illegal content. Lawmakers also summoned Mark Zuckerberg to attend a congressional hearing in 2018, but the Facebook CEO declined.

  • Luxury brand Gucci will begin accepting cryptocurrency payments at select stores across the US later this month. Accepted cryptocurrencies will include Bitcoin, Bitcoin Cash, Ethereum, Wrapped Bitcoin, Litecoin, Dogecoin, Shiba Inu, and five USD equivalent stablecoins.

  • The signing that made it the first African country to accept Bitcoin as legal currency has raised concerns from the IMF. This is similar to the IMF’s concern with the similar decision of El Salvador. The real concern of the IMF may be the reduction of its influence over dependent countries.

  • The SEC has announced 20 additional positions for the unit responsible for protecting investors in the cryptocurrency market and from cyber-related threats. This additional staffing will elevate the ranks of supervisors, investigative staff attorneys, adjudication counselors, and fraud analysts at the agency’s Washington, DC headquarters, as well as several regional offices. area.

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