SlideShare a Scribd company logo

Effects of Fed Rate Increases on Cryptocurrencies

The US Federal Reserve increased interest rates by half a percent in May. The minutes from their May Open Market Committee meeting indicate a strong sentiment for at least three more half percent increases in the coming months. What will be the effects of Fed rate increases on cryptocurrencies? https://youtu.be/dnYAW8RFQ7c

1 of 18
Download to read offline
By: www.ProfitableInvestingTips.com
The US Federal Reserve increased interest rates
by half a percent in May. The minutes from
their May Open Market Committee meeting
indicate a strong sentiment for at least three
more half percent increases in the coming
months. What will be the effects of Fed rate
increases on cryptocurrencies?
The May increase drove stock prices and crypto
prices down significantly. Will this trend
continue as the Fed works at taming inflation
with higher interest rates and cutting back their
balance sheet?
Interest Rate Increases and the Commodity and
Crypto Markets
Bankrate looks at how interest rate increases will
affect crypto and other markets. Protectionism,
the war in Ukraine, and lockdowns in China
have driven many commodity prices up.
Meanwhile, Bitcoin, which was supposed to be
a hedge against inflation and a store of value
has fallen like a rock. Bitcoin’s fall started after
its peak in November of 2021 but it has largely
paralleled the Nasdaq in its ups and down as
the market crashed.
The Bankrate authors note that cryptocurrencies
are acting like other risk-on assets in the
current environment, falling as the Fed cuts
back on their balance sheet and promises
consecutive monthly rate increases. The
interest rate will keep going up so long as the
Fed needs to fight inflation. It would appear
that the cryptocurrencies will follow the market
down as rates go up. How long will that take
and what will happen to crypto when inflation
is in check?
Supply Side Inflation
The tools that the Federal Reserve uses to fight
inflation work when there is too much money
in the economy. Higher interest rates drive up
the cost of doing business and reduction of the
Fed balance sheet reduces available capital. The
price of wheat is up because one the major
exporters, Ukraine, is going to produce less and
perhaps not export any wheat this year due to
the war.
Computer chips are scarce because Covid is still
playing havoc with the global supply chain.
These problems will not get better because the
Fed raises rates. But the rate increases will slow
the economy, make money scarcer, and drive
the market lower. The dynamics that have
driven Bitcoin and others downward will likely
continue so long as the Fed is compelled to
raise rates.
Effects of Fed Rate Increases on Cryptocurrencies
What Is the Future of Crypto?
During the era of low interest rates following the
Financial Crisis one only needed to put money
into an ETF that tracked the S&P 500 to be a
successful investor. If you bought stock in
Facebook, Netflix, Amazon.com, Apple, or
Alphabet you were a genius. That is, you were
a genius until this year when all of the FAANG
tech darlings have gone down and Netflix lost
35% of its value in one day in April as noted
by Bloomberg. From November of 2021 to May
of 2022 Bitcoin lost nearly 60% of its value.
For those investors and traders who became
accustomed to putting money into tried and
true Bitcoin, Netflix, Amazon, etc. it has been a
terrible shock to realize that there is more to
picking investments than following the herd.
The problem with Bitcoin is that it has a very
low price when one bases its value on
fundamentals.
It does not pay dividends or interest. NFTs and
DeFi are two niches where Bitcoin and others
will still have value. What that value will be
remains to be seen. What also remains to be
seen is if Bitcoin and other cryptocurrencies
will have any speculative value should the
current economic situation settle into a long
term recession with a wholesale flight to safe
haven assets in the markets and currencies.
USD BTC
If you think of Bitcoin as a commodity or an
investment you will think of how much a
Bitcoin is worth in dollars. But if you think of
Bitcoin as a currency you think of the USD BTC
currency pair.
In the Forex market when the Fed raises the
interest rate the value of the dollar goes up
versus the euro, yen, and the rest. Ignoring all
other factors we can expect to see the dollar go
up against all other currencies as the interest
rate goes up and that, by itself, will reduce the
value of Bitcoin and other cryptocurrencies.
For more insights and useful information about
investments and investing, visit
www.ProfitableInvestingTips.com.

Recommended

Will Crypto Survive the Coming Interest Rate Hikes?
Will Crypto Survive the Coming Interest Rate Hikes?Will Crypto Survive the Coming Interest Rate Hikes?
Will Crypto Survive the Coming Interest Rate Hikes?InvestingTips
 
Do Higher Interest Rates Help or Hurt Crypto?
Do Higher Interest Rates Help or Hurt Crypto?Do Higher Interest Rates Help or Hurt Crypto?
Do Higher Interest Rates Help or Hurt Crypto?InvestingTips
 
How to Protect Your Crypto From Inflation
How to Protect Your Crypto From InflationHow to Protect Your Crypto From Inflation
How to Protect Your Crypto From InflationInvestingTips
 
Interest Rates Versus Crypto Value
Interest Rates Versus Crypto ValueInterest Rates Versus Crypto Value
Interest Rates Versus Crypto ValueInvestingTips
 
What Cryptocurrencies Are Inflation Proof?
What Cryptocurrencies Are Inflation Proof?What Cryptocurrencies Are Inflation Proof?
What Cryptocurrencies Are Inflation Proof?InvestingTips
 
BITCOIN PRICE PASSES $600 AS TALKS OF RECESSION INTENSIFY
BITCOIN PRICE PASSES $600 AS TALKS OF RECESSION INTENSIFYBITCOIN PRICE PASSES $600 AS TALKS OF RECESSION INTENSIFY
BITCOIN PRICE PASSES $600 AS TALKS OF RECESSION INTENSIFYSteven Rhyner
 
Prepare for Our Perilous 2024 Economy: A Warning
Prepare for Our Perilous 2024 Economy: A WarningPrepare for Our Perilous 2024 Economy: A Warning
Prepare for Our Perilous 2024 Economy: A WarningRon Surz
 
Bloomberg Crypto Outlook - May 2021
Bloomberg Crypto Outlook  - May 2021Bloomberg Crypto Outlook  - May 2021
Bloomberg Crypto Outlook - May 2021Peter Wises
 

More Related Content

Similar to Effects of Fed Rate Increases on Cryptocurrencies

IS BITCOIN ABOUT TO BREAKOUT? CHARTS SUGGEST SO
IS BITCOIN ABOUT TO BREAKOUT? CHARTS SUGGEST SOIS BITCOIN ABOUT TO BREAKOUT? CHARTS SUGGEST SO
IS BITCOIN ABOUT TO BREAKOUT? CHARTS SUGGEST SOSteven Rhyner
 
Why Is Buying the Crypto Dip Not Working in 2022?
Why Is Buying the Crypto Dip Not Working in 2022?Why Is Buying the Crypto Dip Not Working in 2022?
Why Is Buying the Crypto Dip Not Working in 2022?InvestingTips
 
What Happened to the Bitcoin Stock Correlation?
What Happened to the Bitcoin Stock Correlation?What Happened to the Bitcoin Stock Correlation?
What Happened to the Bitcoin Stock Correlation?InvestingTips
 
CoinGabbar's April Bulletin.pdf
CoinGabbar's April Bulletin.pdfCoinGabbar's April Bulletin.pdf
CoinGabbar's April Bulletin.pdfcryptomarket1
 
BITCOIN PRICE LIKELY TO REACH $2000 AS MORE SERIOUS INVESTORS GET INVOLVED
BITCOIN PRICE LIKELY TO REACH $2000 AS MORE SERIOUS INVESTORS GET INVOLVEDBITCOIN PRICE LIKELY TO REACH $2000 AS MORE SERIOUS INVESTORS GET INVOLVED
BITCOIN PRICE LIKELY TO REACH $2000 AS MORE SERIOUS INVESTORS GET INVOLVEDSteven Rhyner
 
Which Cryptocurrencies Will Survive the Coming Recession?
Which Cryptocurrencies Will Survive the Coming Recession?Which Cryptocurrencies Will Survive the Coming Recession?
Which Cryptocurrencies Will Survive the Coming Recession?InvestingTips
 
Future of Digital Currency
Future of Digital CurrencyFuture of Digital Currency
Future of Digital CurrencyInvestingTips
 
How to Make $100k/month with Trade
How to Make $100k/month with TradeHow to Make $100k/month with Trade
How to Make $100k/month with TradeData Reports
 
Will 2024 Be a Good Year for Crypto?
Will 2024 Be a Good Year for Crypto?Will 2024 Be a Good Year for Crypto?
Will 2024 Be a Good Year for Crypto?InvestingTips
 
Intermarket Analysis: where bitcoin fits in
Intermarket Analysis: where bitcoin fits inIntermarket Analysis: where bitcoin fits in
Intermarket Analysis: where bitcoin fits inGeorge Samuel Samman
 
Is Debt Default Good or Bad for Bitcoin?
Is Debt Default Good or Bad for Bitcoin?Is Debt Default Good or Bad for Bitcoin?
Is Debt Default Good or Bad for Bitcoin?InvestingTips
 
Jpc weekly market view 2 december 2015
Jpc weekly market view 2 december 2015Jpc weekly market view 2 december 2015
Jpc weekly market view 2 december 2015Jon Taubert
 
Newsletter 082415 Final Volume 1 Issue 9
Newsletter 082415 Final Volume 1 Issue 9Newsletter 082415 Final Volume 1 Issue 9
Newsletter 082415 Final Volume 1 Issue 9Jonathan M. Lamb
 
What Will a Bitcoin Rebound Look Like?
What Will a Bitcoin Rebound Look Like?What Will a Bitcoin Rebound Look Like?
What Will a Bitcoin Rebound Look Like?InvestingTips
 
Is the Federal Reserve a Threat to Cryptocurrencies?
Is the Federal Reserve a Threat to Cryptocurrencies?Is the Federal Reserve a Threat to Cryptocurrencies?
Is the Federal Reserve a Threat to Cryptocurrencies?InvestingTips
 
The Consequences Are Profound
The Consequences Are ProfoundThe Consequences Are Profound
The Consequences Are ProfoundShamik Bhose
 
FEAR NOT THE FORK BUT THE FEAR ITSELF: BITCOIN WISDOM
FEAR NOT THE FORK BUT THE FEAR ITSELF: BITCOIN WISDOMFEAR NOT THE FORK BUT THE FEAR ITSELF: BITCOIN WISDOM
FEAR NOT THE FORK BUT THE FEAR ITSELF: BITCOIN WISDOMSteven Rhyner
 
November 2010 commentary
November 2010 commentaryNovember 2010 commentary
November 2010 commentaryMartin Leduc
 

Similar to Effects of Fed Rate Increases on Cryptocurrencies (20)

IS BITCOIN ABOUT TO BREAKOUT? CHARTS SUGGEST SO
IS BITCOIN ABOUT TO BREAKOUT? CHARTS SUGGEST SOIS BITCOIN ABOUT TO BREAKOUT? CHARTS SUGGEST SO
IS BITCOIN ABOUT TO BREAKOUT? CHARTS SUGGEST SO
 
Why Is Buying the Crypto Dip Not Working in 2022?
Why Is Buying the Crypto Dip Not Working in 2022?Why Is Buying the Crypto Dip Not Working in 2022?
Why Is Buying the Crypto Dip Not Working in 2022?
 
What Happened to the Bitcoin Stock Correlation?
What Happened to the Bitcoin Stock Correlation?What Happened to the Bitcoin Stock Correlation?
What Happened to the Bitcoin Stock Correlation?
 
CoinGabbar's April Bulletin.pdf
CoinGabbar's April Bulletin.pdfCoinGabbar's April Bulletin.pdf
CoinGabbar's April Bulletin.pdf
 
BITCOIN PRICE LIKELY TO REACH $2000 AS MORE SERIOUS INVESTORS GET INVOLVED
BITCOIN PRICE LIKELY TO REACH $2000 AS MORE SERIOUS INVESTORS GET INVOLVEDBITCOIN PRICE LIKELY TO REACH $2000 AS MORE SERIOUS INVESTORS GET INVOLVED
BITCOIN PRICE LIKELY TO REACH $2000 AS MORE SERIOUS INVESTORS GET INVOLVED
 
Which Cryptocurrencies Will Survive the Coming Recession?
Which Cryptocurrencies Will Survive the Coming Recession?Which Cryptocurrencies Will Survive the Coming Recession?
Which Cryptocurrencies Will Survive the Coming Recession?
 
Future of Digital Currency
Future of Digital CurrencyFuture of Digital Currency
Future of Digital Currency
 
How to Make $100k/month with Trade
How to Make $100k/month with TradeHow to Make $100k/month with Trade
How to Make $100k/month with Trade
 
Will 2024 Be a Good Year for Crypto?
Will 2024 Be a Good Year for Crypto?Will 2024 Be a Good Year for Crypto?
Will 2024 Be a Good Year for Crypto?
 
Intermarket Analysis: where bitcoin fits in
Intermarket Analysis: where bitcoin fits inIntermarket Analysis: where bitcoin fits in
Intermarket Analysis: where bitcoin fits in
 
Is Debt Default Good or Bad for Bitcoin?
Is Debt Default Good or Bad for Bitcoin?Is Debt Default Good or Bad for Bitcoin?
Is Debt Default Good or Bad for Bitcoin?
 
Jpc weekly market view 2 december 2015
Jpc weekly market view 2 december 2015Jpc weekly market view 2 december 2015
Jpc weekly market view 2 december 2015
 
Newsletter 082415 Final Volume 1 Issue 9
Newsletter 082415 Final Volume 1 Issue 9Newsletter 082415 Final Volume 1 Issue 9
Newsletter 082415 Final Volume 1 Issue 9
 
What Will a Bitcoin Rebound Look Like?
What Will a Bitcoin Rebound Look Like?What Will a Bitcoin Rebound Look Like?
What Will a Bitcoin Rebound Look Like?
 
Intermarket analysis and btc
Intermarket analysis and btcIntermarket analysis and btc
Intermarket analysis and btc
 
Is the Federal Reserve a Threat to Cryptocurrencies?
Is the Federal Reserve a Threat to Cryptocurrencies?Is the Federal Reserve a Threat to Cryptocurrencies?
Is the Federal Reserve a Threat to Cryptocurrencies?
 
Bitcoin Essay
Bitcoin EssayBitcoin Essay
Bitcoin Essay
 
The Consequences Are Profound
The Consequences Are ProfoundThe Consequences Are Profound
The Consequences Are Profound
 
FEAR NOT THE FORK BUT THE FEAR ITSELF: BITCOIN WISDOM
FEAR NOT THE FORK BUT THE FEAR ITSELF: BITCOIN WISDOMFEAR NOT THE FORK BUT THE FEAR ITSELF: BITCOIN WISDOM
FEAR NOT THE FORK BUT THE FEAR ITSELF: BITCOIN WISDOM
 
November 2010 commentary
November 2010 commentaryNovember 2010 commentary
November 2010 commentary
 

More from InvestingTips

When to Buy and When to Sell Bitcoin
When to Buy and When to Sell BitcoinWhen to Buy and When to Sell Bitcoin
When to Buy and When to Sell BitcoinInvestingTips
 
Dangers of Investment Leverage
Dangers of Investment LeverageDangers of Investment Leverage
Dangers of Investment LeverageInvestingTips
 
Can You Predict Bitcoin Ups and Downs?
Can You Predict Bitcoin Ups and Downs?Can You Predict Bitcoin Ups and Downs?
Can You Predict Bitcoin Ups and Downs?InvestingTips
 
Are Private Digital Tokens On Their Way Out?
Are Private Digital Tokens On Their Way Out?Are Private Digital Tokens On Their Way Out?
Are Private Digital Tokens On Their Way Out?InvestingTips
 
Accredited Investors At 80 Or More Years Old
Accredited Investors At 80 Or More Years OldAccredited Investors At 80 Or More Years Old
Accredited Investors At 80 Or More Years OldInvestingTips
 
How Many AK47s Did Hamas Buy With Crypto?
How Many AK47s Did Hamas Buy With Crypto?How Many AK47s Did Hamas Buy With Crypto?
How Many AK47s Did Hamas Buy With Crypto?InvestingTips
 
Uranium Backed Crypto Tokens
Uranium Backed Crypto TokensUranium Backed Crypto Tokens
Uranium Backed Crypto TokensInvestingTips
 
$4 Billion to Settle Binance Case
$4 Billion to Settle Binance Case $4 Billion to Settle Binance Case
$4 Billion to Settle Binance Case InvestingTips
 
How Would a Crypto Privacy Pool Work?
How Would a Crypto Privacy Pool Work?How Would a Crypto Privacy Pool Work?
How Would a Crypto Privacy Pool Work?InvestingTips
 
Blockchain Tech in the Wake of Crypto Winter
Blockchain Tech in the Wake of Crypto WinterBlockchain Tech in the Wake of Crypto Winter
Blockchain Tech in the Wake of Crypto WinterInvestingTips
 
What Is the Sam Bankman-Fried Lesson?
What Is the Sam Bankman-Fried Lesson?What Is the Sam Bankman-Fried Lesson?
What Is the Sam Bankman-Fried Lesson?InvestingTips
 
How Dangerous Is Crypto Leverage?
How Dangerous Is Crypto Leverage?How Dangerous Is Crypto Leverage?
How Dangerous Is Crypto Leverage?InvestingTips
 
Economic and Investment Risks for 2024
Economic and Investment Risks for 2024Economic and Investment Risks for 2024
Economic and Investment Risks for 2024InvestingTips
 
Can Stablecoins Be Self-regulating?
Can Stablecoins Be Self-regulating?Can Stablecoins Be Self-regulating?
Can Stablecoins Be Self-regulating?InvestingTips
 
Would a Digital Dollar Hurt Banks?
Would a Digital Dollar Hurt Banks?Would a Digital Dollar Hurt Banks?
Would a Digital Dollar Hurt Banks?InvestingTips
 
Metaverse Propelled By Activision Blizzard Acquisition
Metaverse Propelled By Activision Blizzard AcquisitionMetaverse Propelled By Activision Blizzard Acquisition
Metaverse Propelled By Activision Blizzard AcquisitionInvestingTips
 
Does Crypto Finance Terrorism?
Does Crypto Finance Terrorism?Does Crypto Finance Terrorism?
Does Crypto Finance Terrorism?InvestingTips
 
Who’s Rules Will Crypto Follow?
Who’s Rules Will Crypto Follow?Who’s Rules Will Crypto Follow?
Who’s Rules Will Crypto Follow?InvestingTips
 
Are Smart Contracts Legal?
Are Smart Contracts Legal?Are Smart Contracts Legal?
Are Smart Contracts Legal?InvestingTips
 

More from InvestingTips (20)

When to Buy and When to Sell Bitcoin
When to Buy and When to Sell BitcoinWhen to Buy and When to Sell Bitcoin
When to Buy and When to Sell Bitcoin
 
Dangers of Investment Leverage
Dangers of Investment LeverageDangers of Investment Leverage
Dangers of Investment Leverage
 
Can You Predict Bitcoin Ups and Downs?
Can You Predict Bitcoin Ups and Downs?Can You Predict Bitcoin Ups and Downs?
Can You Predict Bitcoin Ups and Downs?
 
Are Private Digital Tokens On Their Way Out?
Are Private Digital Tokens On Their Way Out?Are Private Digital Tokens On Their Way Out?
Are Private Digital Tokens On Their Way Out?
 
Accredited Investors At 80 Or More Years Old
Accredited Investors At 80 Or More Years OldAccredited Investors At 80 Or More Years Old
Accredited Investors At 80 Or More Years Old
 
How Many AK47s Did Hamas Buy With Crypto?
How Many AK47s Did Hamas Buy With Crypto?How Many AK47s Did Hamas Buy With Crypto?
How Many AK47s Did Hamas Buy With Crypto?
 
Uranium Backed Crypto Tokens
Uranium Backed Crypto TokensUranium Backed Crypto Tokens
Uranium Backed Crypto Tokens
 
$4 Billion to Settle Binance Case
$4 Billion to Settle Binance Case $4 Billion to Settle Binance Case
$4 Billion to Settle Binance Case
 
How Would a Crypto Privacy Pool Work?
How Would a Crypto Privacy Pool Work?How Would a Crypto Privacy Pool Work?
How Would a Crypto Privacy Pool Work?
 
Blockchain Tech in the Wake of Crypto Winter
Blockchain Tech in the Wake of Crypto WinterBlockchain Tech in the Wake of Crypto Winter
Blockchain Tech in the Wake of Crypto Winter
 
What Is the Sam Bankman-Fried Lesson?
What Is the Sam Bankman-Fried Lesson?What Is the Sam Bankman-Fried Lesson?
What Is the Sam Bankman-Fried Lesson?
 
How Dangerous Is Crypto Leverage?
How Dangerous Is Crypto Leverage?How Dangerous Is Crypto Leverage?
How Dangerous Is Crypto Leverage?
 
Economic and Investment Risks for 2024
Economic and Investment Risks for 2024Economic and Investment Risks for 2024
Economic and Investment Risks for 2024
 
Can Stablecoins Be Self-regulating?
Can Stablecoins Be Self-regulating?Can Stablecoins Be Self-regulating?
Can Stablecoins Be Self-regulating?
 
Bitcoin Versus NFTs
Bitcoin Versus NFTsBitcoin Versus NFTs
Bitcoin Versus NFTs
 
Would a Digital Dollar Hurt Banks?
Would a Digital Dollar Hurt Banks?Would a Digital Dollar Hurt Banks?
Would a Digital Dollar Hurt Banks?
 
Metaverse Propelled By Activision Blizzard Acquisition
Metaverse Propelled By Activision Blizzard AcquisitionMetaverse Propelled By Activision Blizzard Acquisition
Metaverse Propelled By Activision Blizzard Acquisition
 
Does Crypto Finance Terrorism?
Does Crypto Finance Terrorism?Does Crypto Finance Terrorism?
Does Crypto Finance Terrorism?
 
Who’s Rules Will Crypto Follow?
Who’s Rules Will Crypto Follow?Who’s Rules Will Crypto Follow?
Who’s Rules Will Crypto Follow?
 
Are Smart Contracts Legal?
Are Smart Contracts Legal?Are Smart Contracts Legal?
Are Smart Contracts Legal?
 

Recently uploaded

Comunicado de Sendero Resources por Peñas Negras
Comunicado de Sendero Resources por Peñas NegrasComunicado de Sendero Resources por Peñas Negras
Comunicado de Sendero Resources por Peñas NegrasEduardo Nelson German
 
Gabe Whitley Election Complaint Against Abdul-Hakim Shabazz
Gabe Whitley Election Complaint Against Abdul-Hakim ShabazzGabe Whitley Election Complaint Against Abdul-Hakim Shabazz
Gabe Whitley Election Complaint Against Abdul-Hakim ShabazzAbdul-Hakim Shabazz
 
News-18-1762024_DT_28_02_2024_w.pdfodkpo
News-18-1762024_DT_28_02_2024_w.pdfodkpoNews-18-1762024_DT_28_02_2024_w.pdfodkpo
News-18-1762024_DT_28_02_2024_w.pdfodkpobhavenpr
 
cjp-complaints.pdfjopapekpoeopkperpkepop
cjp-complaints.pdfjopapekpoeopkperpkepopcjp-complaints.pdfjopapekpoeopkperpkepop
cjp-complaints.pdfjopapekpoeopkperpkepopbhavenpr
 
01032024_First India Newspaper Jaipur.pdf
01032024_First India Newspaper Jaipur.pdf01032024_First India Newspaper Jaipur.pdf
01032024_First India Newspaper Jaipur.pdfFIRST INDIA
 
The Pursuit of Peace in a Time of Polycrisis
The Pursuit of Peace in a Time of PolycrisisThe Pursuit of Peace in a Time of Polycrisis
The Pursuit of Peace in a Time of PolycrisisRosalind Warner
 
President Akufo-Addo's SONA 2024 in pictures.pdf
President Akufo-Addo's SONA 2024 in pictures.pdfPresident Akufo-Addo's SONA 2024 in pictures.pdf
President Akufo-Addo's SONA 2024 in pictures.pdfTheIndependentGhana
 
How Israel Censors American News Coverage
How Israel Censors American News CoverageHow Israel Censors American News Coverage
How Israel Censors American News CoverageTimLangeman1
 
184_ORDER_NO__1822024_DT__28_02_2024_W.pdf
184_ORDER_NO__1822024_DT__28_02_2024_W.pdf184_ORDER_NO__1822024_DT__28_02_2024_W.pdf
184_ORDER_NO__1822024_DT__28_02_2024_W.pdfbhavenpr
 
THE CONFLICT BETWEEN JEWS AND PALESTINIANS AND ITS FUTURE SCENARIOS.pdf
THE CONFLICT BETWEEN JEWS AND PALESTINIANS AND ITS FUTURE SCENARIOS.pdfTHE CONFLICT BETWEEN JEWS AND PALESTINIANS AND ITS FUTURE SCENARIOS.pdf
THE CONFLICT BETWEEN JEWS AND PALESTINIANS AND ITS FUTURE SCENARIOS.pdfFaga1939
 
The Ideological Essence of TDP: Shaping Telugu Identity and Progress
The Ideological Essence of TDP: Shaping Telugu Identity and ProgressThe Ideological Essence of TDP: Shaping Telugu Identity and Progress
The Ideological Essence of TDP: Shaping Telugu Identity and Progressnarsireddynannuri1
 
AAj-Tak-_1772024_DT__28_02_2024_W.pdfतित
AAj-Tak-_1772024_DT__28_02_2024_W.pdfतितAAj-Tak-_1772024_DT__28_02_2024_W.pdfतित
AAj-Tak-_1772024_DT__28_02_2024_W.pdfतितbhavenpr
 
Manaskhand the Enchanting Abode of Gods.pdf
Manaskhand the Enchanting Abode of Gods.pdfManaskhand the Enchanting Abode of Gods.pdf
Manaskhand the Enchanting Abode of Gods.pdfmilind789
 
Times-Now-Navharat-1782024_DT__28_02_2024_W.pdf
Times-Now-Navharat-1782024_DT__28_02_2024_W.pdfTimes-Now-Navharat-1782024_DT__28_02_2024_W.pdf
Times-Now-Navharat-1782024_DT__28_02_2024_W.pdfbhavenpr
 
It’s time to stop the lie that “Hamas doesn’t represent the Palestinian peopl...
It’s time to stop the lie that “Hamas doesn’t represent the Palestinian peopl...It’s time to stop the lie that “Hamas doesn’t represent the Palestinian peopl...
It’s time to stop the lie that “Hamas doesn’t represent the Palestinian peopl...JonSutz
 

Recently uploaded (16)

Comunicado de Sendero Resources por Peñas Negras
Comunicado de Sendero Resources por Peñas NegrasComunicado de Sendero Resources por Peñas Negras
Comunicado de Sendero Resources por Peñas Negras
 
Gabe Whitley Election Complaint Against Abdul-Hakim Shabazz
Gabe Whitley Election Complaint Against Abdul-Hakim ShabazzGabe Whitley Election Complaint Against Abdul-Hakim Shabazz
Gabe Whitley Election Complaint Against Abdul-Hakim Shabazz
 
News-18-1762024_DT_28_02_2024_w.pdfodkpo
News-18-1762024_DT_28_02_2024_w.pdfodkpoNews-18-1762024_DT_28_02_2024_w.pdfodkpo
News-18-1762024_DT_28_02_2024_w.pdfodkpo
 
cjp-complaints.pdfjopapekpoeopkperpkepop
cjp-complaints.pdfjopapekpoeopkperpkepopcjp-complaints.pdfjopapekpoeopkperpkepop
cjp-complaints.pdfjopapekpoeopkperpkepop
 
Fred
Fred Fred
Fred
 
01032024_First India Newspaper Jaipur.pdf
01032024_First India Newspaper Jaipur.pdf01032024_First India Newspaper Jaipur.pdf
01032024_First India Newspaper Jaipur.pdf
 
The Pursuit of Peace in a Time of Polycrisis
The Pursuit of Peace in a Time of PolycrisisThe Pursuit of Peace in a Time of Polycrisis
The Pursuit of Peace in a Time of Polycrisis
 
President Akufo-Addo's SONA 2024 in pictures.pdf
President Akufo-Addo's SONA 2024 in pictures.pdfPresident Akufo-Addo's SONA 2024 in pictures.pdf
President Akufo-Addo's SONA 2024 in pictures.pdf
 
How Israel Censors American News Coverage
How Israel Censors American News CoverageHow Israel Censors American News Coverage
How Israel Censors American News Coverage
 
184_ORDER_NO__1822024_DT__28_02_2024_W.pdf
184_ORDER_NO__1822024_DT__28_02_2024_W.pdf184_ORDER_NO__1822024_DT__28_02_2024_W.pdf
184_ORDER_NO__1822024_DT__28_02_2024_W.pdf
 
THE CONFLICT BETWEEN JEWS AND PALESTINIANS AND ITS FUTURE SCENARIOS.pdf
THE CONFLICT BETWEEN JEWS AND PALESTINIANS AND ITS FUTURE SCENARIOS.pdfTHE CONFLICT BETWEEN JEWS AND PALESTINIANS AND ITS FUTURE SCENARIOS.pdf
THE CONFLICT BETWEEN JEWS AND PALESTINIANS AND ITS FUTURE SCENARIOS.pdf
 
The Ideological Essence of TDP: Shaping Telugu Identity and Progress
The Ideological Essence of TDP: Shaping Telugu Identity and ProgressThe Ideological Essence of TDP: Shaping Telugu Identity and Progress
The Ideological Essence of TDP: Shaping Telugu Identity and Progress
 
AAj-Tak-_1772024_DT__28_02_2024_W.pdfतित
AAj-Tak-_1772024_DT__28_02_2024_W.pdfतितAAj-Tak-_1772024_DT__28_02_2024_W.pdfतित
AAj-Tak-_1772024_DT__28_02_2024_W.pdfतित
 
Manaskhand the Enchanting Abode of Gods.pdf
Manaskhand the Enchanting Abode of Gods.pdfManaskhand the Enchanting Abode of Gods.pdf
Manaskhand the Enchanting Abode of Gods.pdf
 
Times-Now-Navharat-1782024_DT__28_02_2024_W.pdf
Times-Now-Navharat-1782024_DT__28_02_2024_W.pdfTimes-Now-Navharat-1782024_DT__28_02_2024_W.pdf
Times-Now-Navharat-1782024_DT__28_02_2024_W.pdf
 
It’s time to stop the lie that “Hamas doesn’t represent the Palestinian peopl...
It’s time to stop the lie that “Hamas doesn’t represent the Palestinian peopl...It’s time to stop the lie that “Hamas doesn’t represent the Palestinian peopl...
It’s time to stop the lie that “Hamas doesn’t represent the Palestinian peopl...
 

Effects of Fed Rate Increases on Cryptocurrencies

  • 2. The US Federal Reserve increased interest rates by half a percent in May. The minutes from their May Open Market Committee meeting indicate a strong sentiment for at least three more half percent increases in the coming months. What will be the effects of Fed rate increases on cryptocurrencies?
  • 3. The May increase drove stock prices and crypto prices down significantly. Will this trend continue as the Fed works at taming inflation with higher interest rates and cutting back their balance sheet?
  • 4. Interest Rate Increases and the Commodity and Crypto Markets
  • 5. Bankrate looks at how interest rate increases will affect crypto and other markets. Protectionism, the war in Ukraine, and lockdowns in China have driven many commodity prices up. Meanwhile, Bitcoin, which was supposed to be a hedge against inflation and a store of value has fallen like a rock. Bitcoin’s fall started after its peak in November of 2021 but it has largely paralleled the Nasdaq in its ups and down as the market crashed.
  • 6. The Bankrate authors note that cryptocurrencies are acting like other risk-on assets in the current environment, falling as the Fed cuts back on their balance sheet and promises consecutive monthly rate increases. The interest rate will keep going up so long as the Fed needs to fight inflation. It would appear that the cryptocurrencies will follow the market down as rates go up. How long will that take and what will happen to crypto when inflation is in check?
  • 8. The tools that the Federal Reserve uses to fight inflation work when there is too much money in the economy. Higher interest rates drive up the cost of doing business and reduction of the Fed balance sheet reduces available capital. The price of wheat is up because one the major exporters, Ukraine, is going to produce less and perhaps not export any wheat this year due to the war.
  • 9. Computer chips are scarce because Covid is still playing havoc with the global supply chain. These problems will not get better because the Fed raises rates. But the rate increases will slow the economy, make money scarcer, and drive the market lower. The dynamics that have driven Bitcoin and others downward will likely continue so long as the Fed is compelled to raise rates.
  • 11. What Is the Future of Crypto?
  • 12. During the era of low interest rates following the Financial Crisis one only needed to put money into an ETF that tracked the S&P 500 to be a successful investor. If you bought stock in Facebook, Netflix, Amazon.com, Apple, or Alphabet you were a genius. That is, you were a genius until this year when all of the FAANG tech darlings have gone down and Netflix lost 35% of its value in one day in April as noted by Bloomberg. From November of 2021 to May of 2022 Bitcoin lost nearly 60% of its value.
  • 13. For those investors and traders who became accustomed to putting money into tried and true Bitcoin, Netflix, Amazon, etc. it has been a terrible shock to realize that there is more to picking investments than following the herd. The problem with Bitcoin is that it has a very low price when one bases its value on fundamentals.
  • 14. It does not pay dividends or interest. NFTs and DeFi are two niches where Bitcoin and others will still have value. What that value will be remains to be seen. What also remains to be seen is if Bitcoin and other cryptocurrencies will have any speculative value should the current economic situation settle into a long term recession with a wholesale flight to safe haven assets in the markets and currencies.
  • 16. If you think of Bitcoin as a commodity or an investment you will think of how much a Bitcoin is worth in dollars. But if you think of Bitcoin as a currency you think of the USD BTC currency pair.
  • 17. In the Forex market when the Fed raises the interest rate the value of the dollar goes up versus the euro, yen, and the rest. Ignoring all other factors we can expect to see the dollar go up against all other currencies as the interest rate goes up and that, by itself, will reduce the value of Bitcoin and other cryptocurrencies.
  • 18. For more insights and useful information about investments and investing, visit www.ProfitableInvestingTips.com.