“Bullish Rate Rise” – Why Crypto Surged Today in the Face of Bad News

Crypto markets have been booming since news of a 75 basis point interest rate hike in the US, with experts explaining that markets may have initially braced for much worse.

On July 27, Bitcoin (BTC) price jumped about 8% to hit the $22,500 mark following the decision of the Federal Open Markets Committee (FOMC) to raise interest rates again. Many other top crypto assets also rose in price, with Ether (ETH), Polkadot (DOT), and Polygon (MATIC) all recording notable double-digit gains in the past 24 hours.

Founder of quantum economics and CEO Mati Greenspan jokingly asked if it was a “bullish rate hike” on Twitter on Wednesday.

Speaking to Cointelegraph, Greenspan noted that investors were clearly expecting worse and suggested that this latest rally was nothing out of the ordinary.

“Markets love to go up on Fed days, even when their decision must be tough. Powell is particularly good at breaking bad news. Clearly, investors were expecting worse.

Attempts by the Fed to rein in inflation by raising interest rates are usually associated with a decline in investment activity in the markets.

However, opinions are divided within the community as to whether the latest the pump will have enough momentum to sustain upwardsor if there is a significant retracement on the charts before the market begins to fully rally.

Pav Hundal, an analyst at Australian crypto exchange Swyftx, told Cointelegraph that the company was “surprised at the exuberance of the reaction to yesterday’s rate hike” as the underlying macro landscape still looks outstanding.

The Fed says one thing and the markets seem to hear another every time we see rate hikes. In June, it was the Fed that suggested big rate hikes would be “uncommon”, this time around its Jay Powell who hinted that the pace of the hike could “slow down”.

“The best indicator of what is to come is the underlying economic data and for now at least it looks like some inflationary pressures are easing, with gasoline prices falling alongside commodity futures. like corn and wheat, as well as some shipping costs,” he added.

Related: Ethereum Price ‘Cup and Handle’ Pattern Hints at Potential Breakout Against Bitcoin

Hundal went on to note that Swyftx saw a 100% increase in early trade around the news, stating that “there are clearly a lot of people who see value in current market prices.”

The analyst pointed out that a broader bullish or bearish trend is unlikely to become apparent until the United States releases significant data regarding its gross domestic product (GDP) performance in the coming days. which could indicate whether the country is officially in recession or not. :

“The good news is that we won’t have to wait too long to see what happens to the crypto market when all initial volatility subsides. The US is about to release its GDP data and this is going to be a big stress test. Any negative sentiment here could wipe out recent gains.

“But if the macro landscape starts to show signs of resilience, we could see the crypto market cap stabilize at the $1 trillion point and recover from there,” he added.