What is the impact of interest rate hikes on the crypto circle?

Global hawks central bank interest rate hike is imminent, bitcoin market outlook is to draw wages from the bottom of the market, or to rise against the trend? This is the top concern of global investors. Amid this uncertainty, the first week of February 2022 has not been quiet.

On February 4, European Central Bank President Christine Lagarde no longer ruled out the possibility of raising interest rates this year, moving closer to the policy tightening stance of global central banks. Officials privately expect policy guidance to be adjusted as early as next month.

Just minutes before the ECB’s policy decision, the Bank of England has already raised its benchmark interest rate by 25 basis points to 0.5%, less than two months since the last hike of 15 basis points. The economic aggregates of the United Kingdom and the Eurozone countries play an important role in the world, and the direction of their economic policies may have a profound impact on other countries around the world.

The arrow has to be sent on the string? Global inflation may be approaching a tipping point

In fact, inflation in major countries and regions around the world is so fast that it has to put the brakes on the brakes: The euro zone’s consumer price index (CPI) rose 5.1% in January, beating economists’ expectations and marking the biggest increase in at least two decades, the largest increase in Europe’s The central bank’s 2% target is more than double; the UK’s CPI in November and December hit a 10-year high and a historical high of 5.4%, respectively, setting the fastest growth rate in 30 years; the United States even refreshed 39 years with an inflation rate of 7% record.

 

What is the impact of interest rate hikes on the crypto circle?
Two-year bond yields have risen sharply this year as central banks take hawkish stance, data from Bloomberg

 

As early as December 15, 2021, the Federal Reserve announced that it would reduce monthly purchases of U.S. Treasuries and mortgage-backed securities (MBS) by $30 billion (the original plan was to reduce the monthly reduction of $15 billion), the rate is the previous Twice, by which time the asset purchase program is expected to end early next year, not mid-year, in order to control the pace of inflation. Therefore, among the elites in the U.S. financial circle, the view that the Fed is expected to raise interest rates three times in 2022 is the majority.

Higher interest rates may ease inflation, but also bring unbearable pain

The strengthening of global interest rate hike expectations has triggered panic in the market, and U.S. stocks have fallen sharply. The data shows that the S&P 500 fell by 11% in the 14 days from January 13 to January 27. Goldman Sachs directly warned the Fed for the first time that if the tightening policy caused a “hard landing” of the economy, the United States may face a recession.

 

What is the impact of interest rate hikes on the crypto circle?
S&P 500 plunges 11% in 14 days

 

Fearing the impact of raising interest rates, the Bank of Canada, which had tried to curb high housing prices caused by inflation, unexpectedly announced that it would not raise its benchmark interest rate for the time being. It should be noted that Canada’s federal banking regulator had previously warned that raising interest rates could cause house prices to plummet by more than 20%.

In this regard, the explanation given by the Bank of Canada is: “The new wave of the epidemic has brought uncertainty to the economy,” but we can read from it that people who talk about things are caught between ice and fire.

In contrast, BlackRock, the world’s largest asset management company, took a more radical position, directly asserting that the global interest rate hike will be loud and rainy: “We believe that although the central banks of various countries have tough words, they will eventually admit that by raising interest rates sharply, Fighting inflation will be disproportionately costly to growth. That’s why we think the eventual policy response will be dovish.”

The encrypted market is unique, and the resistance of interest rate hikes will help Bitcoin to grow

On the other hand, the crypto asset market has seen a first fall and then a rise around the Spring Festival this year. The price of Bitcoin has hit $45,000 after 5 consecutive days of gains, and Ethereum is back at $3,200.

 

What is the impact of interest rate hikes on the crypto circle?
Ouyi market data: Bitcoin is approaching the $45,000 mark again after falling below $33,000

 

Of course, the frequent fluctuations in the traditional financial market and the unique scene of the encrypted market have also attracted the attention of the regulators. On February 8, the U.S. SEC asked the public for feedback on whether Bitcoin ETFs and Bitcoin itself are vulnerable to manipulation and fraud. From the perspective of historical laws, the rapid development of new things has more or less threatened traditional forces, and will inevitably face the obstruction of the latter.

However, from the perspective of development, the imaginary space of encrypted assets compared with traditional finance is still incalculable, which may also explain that the value potential of Bitcoin is far from reaching the critical point, and the bullish trend is beyond doubt. Of course, the rate hike policies of major central banks around the world will also have an impact on the crypto world. However, from the perspective of the actual economic environment, there is still great resistance for the policy to resolutely turn sharply, which in turn also constitutes a certain positive for the encrypted market, which in turn supports the long-term bullish expectations of the market.

During the ebb and flow of the tide, it will become a rare opportunity to grasp the direction of the wind

The long bull is expected to superimpose the bottom market, which enhances the gold-absorbing effect of the industry. According to public media reports, more than $800 million in venture capital has poured into the field of crypto assets in the past week. This also means that a new round of bottom-hunting trend may have risen, and more funds and investors will enter the crypto world. The Glassnode chain reported last week that the number of non-zero wallets reached an all-time high, unaffected by the previous decline.

 

What is the impact of interest rate hikes on the crypto circle?

Glassnode data: The number of Bitcoin non-zero wallets has reached a new high

 

The current round of monetary easing cycle led by the Federal Reserve will come to an end sooner or later. At that time, the flow and outlet of the capital market may undergo major changes, and a new round of reshuffle will follow. For investors, choosing a new track from a new starting point, and then choosing carefully and decisively, may be a good way to change lanes and overtake.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/what-is-the-impact-of-interest-rate-hikes-on-the-crypto-circle/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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