- Bitcoin has been sustaining positive price action since the FOMC announcement.
- Altcoins have followed Bitcoin’s cue as well.
- Market pundits remain divided on the possible impact of the interest rate hike.
Market reactions have continued to trail the interest rate hike announced by the Federal Open Market Committee (FOMC). While the entire crypto market has been trading higher, market analysts are divided over the long-term implications of the rate hike for crypto.
Crypto market printing sustained gains since FOMC announcement
The hawkish Fed announcement of a 0.25% interest rate increase, the first since 2018, appears to be having rallying effects on the crypto market so far. Bitcoin and other cryptocurrencies have been largely trading in the green for the past two days.
The pioneer cryptocurrency closed the first day after the announcement, up 4.79% with a trading volume of over $34 billion. The following days have also seen positive price action as Bitcoin is trading around $41,912, up 1.99% in the last 24 hours at the time of writing.
Other notable cryptocurrencies including Ether (ETH), BNB, XRP, SOL, ADA, and AVAX have also been trading bullish. The gains recorded have led the broader crypto market again to be closing in on a $2 trillion capitalization. The crypto market cap currently stands at $1.97 trillion, up 2.6% on the day.
According to Santiment, the price action points to the rate hike having already been”baked into” the market in anticipation of the policy adjustment over the past few months.
What are crypto analysts saying about the FOMC rate hike?
However, market sleuths are divided over what the long-term consequences of the rate hike and coming ones will be for the crypto market. Speaking to Bankrate, Caleb Tucker, the director of portfolio strategy at Merit Financial Advisors, asserted the rate hike would spell the doom of crypto assets being touted as inflation hedges.
“Crypto-assets had been seen as an inflation hedge, but recently they have acted more like other risk assets such as stocks. Higher rates will be a headwind for crypto assets going forward,” he denoted.
In contrast, several analysts are still bullish on crypto. In an interview with Yahoo Finance, Elana Garidis, the CFO and co-founder of Defy Trends maintained that Bitcoin and altcoins are going to ride out the impact of the hike in “relatively stable territory.”
Meanwhile, Lisa Loud also told Yahoo Finance that the crypto market and Bitcoin, in particular, is expected to experience a cushioned impact of the rate hike. This is because, despite reduced risk desire among investors, demand for Bitcoin was likely to remain high due to its key role for Russian and Ukrainian citizens.