The cryptocurrency market has been on the downside for a while due to pressure from Central Banks. Now, while the 75 basis point rate hike of the Fed’s November meeting has been finalized, the 100 basis point increase expectations have also entered the pricing. According to Reuters, the European Central Bank will take a similar stance, pushing BTC, SHIB, DOGE and ADA down.
Attention on this date
The cryptocurrency market has been in a bearish trend since the beginning of the year due to unfavorable market conditions. However, the macroeconomic headwinds don’t seem likely to stop anytime soon. Despite growing concerns about the soundness of the world financial system, the European Central Bank will raise interest rates by another 75 basis points. The next interest rate will be decided on October 27. A hawkish decision from the EU will negatively affect the cryptocurrency market.
Impact of Central Banks on BTC, SHIB, ADA and DOGE
It is the responsibility of central banks to protect the economy from abnormal economic events such as inflation and recession. Banks are currently raising interest rates and tightening lending standards to slow inflation. The latest US inflation data came in higher than expected. The Fed is getting even more aggressive to hit its target in light of weak data.
Now, both the Fed and the European Central Bank (October 27) want to reduce inflation to 2%. Inflation is currently 10% in the Eurozone and 8.2% in the US. Lawmakers say the Covid epidemic, government spending during the pandemic and the Russia-Ukraine war are to blame for the rising inflation. The Fed will raise interest rates by 75 basis points for the fifth consecutive year to meet this specific target. According to experts, the European Central Bank will adopt a similar stance to the Fed.
Cryptocurrency investors expect financial stability concerns to moderate the aggressiveness of central banks. According to the IMF, a recession will hit the world economy in 2023. Tesla CEO Elon Musk and Ark CEO Cathie Wood predict deflation for the economy.
How will Falcon decisions affect the cryptocurrency market?
The hawkish stance of Central Banks will undoubtedly cause negative pressure. However, as we quoted as Kriptokoin.com, Bank of America predicts a significant stock increase in early 2023. Bank analysts are expecting a similar move on the crypto side as it is highly correlated in traditional markets.
Meanwhile, Twitter’s “Kobeissi Letter” shared in its updated analysis its concerns regarding the upcoming meeting of the FED at which a new rate hike will be announced:
We are now witnessing a belated relief rally in equities. After more than a month of almost flat downward price action, a bounce was necessary. However, as third-quarter earnings kick in and the next Fed meeting approaches, we’re far from clear. Use the stops and don’t get trapped.
We are now witnessing another well overdue relief rally in stocks.
After over a month of near straight-line down price action, a bounce was needed.
However, as Q3 earnings begin and the next Fed meeting approaches, we are far from the clear.
Use stops and don’t get trapped.
— The Kobeissi Letter (@KobeissiLetter) October 18, 2022
The last Fed rate decision of the year will be announced on November 1-2. The date for the European Central Bank is October 27.
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