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Will rate hikes spell more trouble for crypto markets?

The US Fed's aggressive monetary tightening policy has spelt trouble for the crypto markets. Find out the road ahead for the crypto markets, as global central banks affirm to higher interest rates

Topics
cryptocurrencies | crypto trading | bitcoins

Lovisha Darad  |  New Delhi 



Image used for representation purpose only
Image used for representation purpose only

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  • Global recession fears, stronger dollar, higher interest rates and spike in bond yields, are building pressure over the crypto .

    Since crypto move in tandem with global equity markets, the ongoing volatility in the US have cast a shadow on crypto-currencies as well.

    All the three major indexes in the US markets like Dow Jones, NASDAQ Composite, and the S&P 500 have shed in the range of 19 per cent to 30 per cent so far this year.

    Therefore, the promise of more rate hikes proclaimed by the US Fed till 2023 is likely to keep crypto markets volatile too.

    According to coinmarketcap.com, the global market capitalisation of crypto assets has tumbled over 57 per cent to 935 billion dollars, so far this year.

    Popular crypto asset Bitcoin, for instance, has tanked nearly 60 per cent so far in 2022. Other assets like Ethereum, BNB, Solana, Dogecoin and Polkadot have declined in the range of 46 per cent to 81 per cent, during the same period.

    Analysts believe that the reduced risk appetite among investors compelled them to shift to less riskier assets like bonds.

    Going ahead, they expect the volatility in crypto markets to continue in the near-term.

    Minal Thukral, Executive Vice-President, Growth and Strategy, CoinDCX, says equity selling pressure to cast a shadow. Crypto markets continue to be sideways. Ethereum, Bitcoin are deflationary assets.

    On the other hand, Devangshu Datta, independent market expert, says that the lack of any fundamental benchmark makes crypto assets a riskier bet to hold for the long-term horizon.

    Devangshu Datta, Independent Market Expert, says Bitcoin’s decline up to 99% possible. No fundamental benchmark for crypto. Crypto assets not a safe bet for long-term.

    Meanwhile, technical charts suggest a ‘death cross’ pattern for bitcoin, which signals a bearish market ahead.

    As regards today, investors will closely track the Reserve Bank of India’s interest rate stance post the 3-day monetary policy committee meeting.

    According to experts, the central bank is likely to raise interest rates up to 50 basis points. FII flows, rupee movement and crude oil prices, will also be on investors’ radar.


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    First Published: Fri, September 30 2022. 07:00 IST
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