Pump Time After Fed Packs Their Bags?
Bitcoin quickly surged above $29.2k within 3 hours after the Fed made their decision to raise US interest rates by 25bps. Since this time, markets have shown some promising rise potential.
At least for now, it seems that the initial reaction to this interest rate hike was: "At least it's over with now. Crypto no longer needs to worry about fiscal policy until June." Obviously, the outcome of interest rates now being +5% in the past 14 months is not ideal if cryptocurrency remains heavily correlated to equities as it has been for most of the past year and a half.
But is this correlation still evident? We posted earlier today that there are growing indications of separation between the two sectors, with today being a good example of crypto not being impacted by rate hikes as the devastating blows in market caps that traders saw throughout 2022 every time Jerome Powell opened his mouth.
In the direct hours after the decision was made to execute this rate hike, we saw some pretty strong indications that crypto was taking a turn for the better. Bitcoin has jumped a modest (but impressive for a short period) +2.1% in the past 6 hours. We can also see that top market cap assets universally had their trading volumes increase.
Also, take a look at how Bitcoin's address activity looked Wednesday, compared to all days over the past week. This was the highest address activity day in two weeks, and the one from two weeks ago was mainly credited due to a major price drop that traders were reacting to. This rally seemed to be much more related to the rate hike finally being official, and you can see how active addresses pushed even higher directly after the announcement.
It's also notable that there aren't any extreme shorts across the board on the largest market cap assets in crypto. Binance Coin was one notable asset that was consistently seeing traders bet against it over the past month. And this extreme short ratio has been reduced back to even after Wednesday's Fed decision.
Regardless on your bullish or bearish position in the markets right now, it's important to assess how speculation revolving around how today's Fed decision would go may have overshadowed the actual impact of the Fed's predictable decision. We've seen several instances of "selling the rumor, buying the news" being the optimal move for traders throughout crypto's history. And even with the rate hike being confirmed, many are at least finally able to exhale as crypto can focus more on its own organic growth again for the time being, as opposed to external world events.
Disclaimer: The opinions expressed in the post are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security or investment product.
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