Crypto markets were sent into a frenzy — in line with broader financial markets — as Jerome Powell delivered his press conference following the U.S. Federal Reserve’s latest 75-basis-point interest-rate increase.
Bitcoin slumped 2.8% following the Fed chair’s remarks and was trading at $20,107 at 8 a.m. ET, according to CoinGecko data. Meanwhile, ether was down 5% to $1,531.
Polygon’s MATIC was up around 12% to $0.96 following its partnership announcement with Instagram that will allow the social media platform’s creators to mint and sell Polygon-based NFTs.
Fed hikes interest rates for the fourth time in a row
The U.S. Federal Reserve raised the federal funds rate by 75 basis points to 3.75-4%, bringing it to levels last seen in Jan. 2008.
Wednesday’s interest rate decision was largely expected. Most traders initially took yesterday’s statement as a sign of a pivot from the central bank before Powell roiled markets.
The Fed chair said it’s “very premature to be thinking about pausing.” He added that “incoming data since our last meeting suggests that the ultimate level of interest rates will be higher than previously expected,” while still noting that the rate of increases might begin to slow as soon as December.
The Fed’s stance shouldn’t come as a surprise, said Michael Brown, head of market intelligence at Caxton, in an email. It’s “rather logical considering the deluge of key events before the next meeting on Dec. 14 — including midterm elections next Tuesday, the October CPI report, a couple of non-farm payrolls releases and revisions to the Q3 GDP figure released last week,” he said.
Moreover, the suggestion that the Fed will slow the rate of hikes is unsurprising, Brown said, given how far rates have come.
Interest rate traders are now split between a 50 basis point hike in December or a 75 basis point increase, according to the CME’s FedWatch tool.
Source : Theblock
