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How Does the FOMC Meeting Affect Crypto?
Cryptocurrencies are often touted as assets that are resistant to inflation. Despite their low interest rates, crypto stores of value can serve as a hedge against volatile fiat currencies. However, when the Fed raises interest rates, the fiat exchange rate which tends to weaken will also have an impact on stock and crypto market conditions.
On the other hand, investment in Bitcoin and other cryptocurrencies has declined in recent months. The reason is that many investors prefer to protect their funds from risky assets and look for alternative instruments that are safer and more profitable.
Quoted from CoinMarketCap, since the Fed started raising interest rates, crypto prices have continued to decline. Bitcoin, for example, in November 2021 was worth $70 thousand per token. However, Bitcoin slumped to $19 thousand.
A similar condition also occurs on Ethereum. From the beginning of the year to August 2022, Ethereum has experienced a 35% price decline.
In general, the results of the FOMC meeting's decisions, whether good or not, will be the most anticipated moment because they affect market conditions and the overall exchange rate. Therefore, investors and traders must have adequate knowledge and information to minimize possible risks.
Hawkish announcements or those that support tight monetary policy usually have a bad impact on crypto, and vice versa.
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WHY IS THE FOMC AFFECTING CRYPTO?
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