Crypto Market - The Calm Before The Storm?

By Bfab | Good vibes | 21 Sep 2022

The Fed will decide today how much they increase the benchmark short-term fed funds rate. Although they have already increased it by 2.25% this year, with the last two rate hikes at a whopping 75 basis points each, consumer inflation is still considered as too high by the Fed, whose target is only 2%...

Therefore, the Fed is expected to raise rates today by 75 basis points, which would mark the third consecutive increase of that size.

Is it bad news for cryptos?

Cryptos and stocks will both be impacted, with more volatility on cryptos. However, a new rate hike does not mean necessarily that markets will crash. The most important point is the difference between the expectation and the actual interest hike. If the hike is lower than expected (e.g., 50 basis points), it will be perceived as good news and markets will rebound - e.g., Bitcoin (BTC) and Ethereum (ETH), following the main stock exchange market trends. On the contrary, if it is higher, it will crash. If it is exactly 75 basis point as expected, there will be a kind of relief and markets may... Slightly... Rebound.

At what time do they decide?

According to Dan Burrows (Kiplinger):

The Fed will release its decision at 2:00 pm Eastern. However, as per usual, market participants are likely to be more keen on what Powell has to say at his post-proclamation press conference scheduled shortly thereafter.

So we can expect some reactions from 2:30 pm Eastern approximately, i.e., 6:30 pm UTC or 8:30 pm Paris time...

What can you do in the meantime?

If you are a short term trader, you can put some stop loss on Binance or FTX... If you are a long term holder, Powell's speech will not change anything.

Disclaimer: this article does not contain any financial advice. The information is provided for general informational and educational purposes only.

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