- To rein down inflation, the Federal Reserve began its tightening cycle in March 2022.
- Crypto and other risky assets were hit hard by the increase in borrowing rates last year.
Reuters reported on Monday that investment firm Goldman Sachs revised its prediction for the first interest-rate decrease by the Federal Reserve from Q4 to the Q3 of next year.
This change occurs at a time when the cryptocurrency market as a whole, and bitcoin in particular, have been experiencing a bullish momentum. The factors likely driving this momentum include the prospect of a spot ETF launch in the United States, the upcoming halving of Bitcoin mining rewards, and a fall in the yield on the 10-year U.S. Treasury, also known as the risk-free rate.
Tightening Cycle
Fed funds futures traders expect the benchmark interest rate, which is now between 5.25% and 5.5%, to drop to a range commencing at 4% by the end of next year.
To rein down inflation, the Federal Reserve began its tightening cycle in March 2022 and raised interest rates many times between 0-0.25%, the most recent of them being in July. Cryptocurrencies and other risky assets were hit hard by the sharp increase in borrowing rates last year.
A shaky start to the week ensued as intraday activity in the crypto market turned bearish. Data collected by CoinMarketCap shows that Bitcoin saw a severe 5% daily drop, with a low of $41,649 and a subsequent recovery to $42,510.
According to CoinShares’ weekly cryptocurrency report, $43 million was deposited, despite investors’ worries over the recent flash selloff. The lion’s share of investment capital went into Bitcoin. The $9.7 million that Ethereum saw last week was dwarfed by Bitcoin’s $19.8 million.
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