Bitcoin And Ethereum Drops After Fed Chair Announces Plan For Future Rate Hikes
After the announcement by Fed chair Jerome Powell, the volatility in the crypto markets increased exponentially. We have already seen numerous times how any change in the US interest policy can affect the crypto markets. This time, the Fed chair hinted towards more interest rate hikes in the near future which caused both BTC and ETH to turn bearish.
Just a few days ago, Fed raised interest rates by 0.75%, which will make it expensive for the public to borrow capital. Furthermore, it will also slow down the US economy as a whole and would put a dent in consumer spending. But, this increase in the interest rate is making the US dollar stronger, which in turn is pushing pressure on cryptocurrencies.
Powell admitted that the US economy has indeed slowed down due to the increased interest rates. However, he also hinted that the pace of interest rate hikes would eventually slow down in the next few months. However, he didn't say anything about stopping the rate hikes or even reversing the trend, which is not good for cryptocurrencies.
BTC And ETH - Technical Analysis
For now, Bitcoin (BTC) is trading close to $20,000, while Ethereum (ETH) is trading above $1500. Both of these digital assets are bullish in the near term, but if we look at the bigger picture, it is still painting red.
As soon as the contents of the Jerome Powell speech were made public, both the BTC and ETH popped higher, only to turn lower once again. If we look at this reaction from a technical point of view, it appears that it was a classic knee-jerk reaction in which the investors jumped early and made wrong assumptions. And once they fully understood what had actually happened, the result was a bearish drop in the BTC and ETH once again.
Another theory could be that it was a bull trap set forth by bears who just wanted to hit some more SL (stop losses) on their way down.