The Federal Reserve, which is the central bank of the United States, has decided to keep the interest rate unchanged for now, but expects to raise it twice more by the end of 2023. The interest rate is the cost of borrowing money, and it affects many aspects of the economy, such as inflation, unemployment, savings, loans, and investments.

The Fed has been raising the interest rate since 2021 to fight inflation, which is the increase in the prices of goods and services over time. Inflation has been high in the U.S. due to the pandemic, supply chain disruptions, and stimulus spending. The Fed’s goal is to keep inflation around 2% per year, which is considered healthy for the economy.

However, the Fed has also signaled that it is ready to pause or slow down its rate hikes if the economy shows signs of weakness or uncertainty. The Fed monitors various indicators of economic health, such as consumer spending, business activity, job creation, and wage growth. The Fed also listens to feedback from businesses and consumers about their expectations and challenges.

The Fed’s decision to hold off on a rate hike in June reflects its cautious approach to balancing inflation and growth. The Fed wants to avoid raising rates too quickly or too high, which could hurt the economy by making borrowing more expensive and discouraging spending and investment. The Fed also wants to avoid raising rates too slowly or too low, which could fuel inflation further and erode the value of money.

The Fed’s announcement also includes its projections for the future path of interest rates, based on its assessment of economic conditions and risks. The Fed said that it expects to raise the interest rate by 0.25% twice more in 2023, bringing it to a range of 5.50% - 5.75% by the end of the year. This implies that the Fed is optimistic about the economic recovery and confident that inflation will moderate over time.

The Fed’s interest rate decisions have implications for consumers and businesses, as they affect the cost and availability of credit, such as mortgages, car loans, credit cards, student loans, and business loans. They also affect the returns on savings accounts, certificates of deposit (CDs), bonds, and other fixed-income investments. Generally speaking, higher interest rates benefit savers and lenders, but hurt borrowers and spenders.

The Fed’s interest rate decisions also influence the stock market, as they affect the profitability and valuation of companies, as well as investors’ appetite for risk and reward. Generally speaking, lower interest rates boost the stock market by making borrowing cheaper for companies and making stocks more attractive compared to other investments. Higher interest rates tend to weigh on the stock market by increasing borrowing costs for companies and making stocks less attractive compared to other investments.

The Fed’s interest rate decisions are not set in stone, and they can change depending on how the economy evolves. The Fed meets eight times a year to review economic data and update its policy stance. The next meeting is scheduled for July 26-27.

#ratehike

Abstract: Global assets faced a "Black Monday." However, with the release of PMI data, recession expectations were reversed. Trump stated, "Vote me to reverse the economic downturn."

Global assets faced a "Black Monday," with circuit breakers triggered in Japan, South Korea, and Turkey. U.S. 2-year Treasury yields fluctuated by 30 basis points, with the 10-year yield briefly ending its inversion. The opening of U.S. stocks saw the market cap of the seven major tech companies shrink by $1.3 trillion, and the Nasdaq closed down 3.4%. Bitcoin plummeted more than 14%, with a surge in liquidation events. The Japanese yen surged, and non-U.S. currencies generally appreciated. Gold dropped nearly $100 from its daily height, while oil remained relatively resilient. Interest rate futures are almost fully priced at a 50 basis point rate cut by the Federal Reserve in September.After the U.S. stock market opened, the anticipated circuit breaker did not occur. As the S&P 500 and Nasdaq Composite Index rebounded, cryptocurrencies also saw significant recovery. Additionally, the final reading for the U.S. July S&P Global Services PMI came in at 55, expected at 56, with a previous value of 56; the ISM Non-Manufacturing PMI data reversed, indicating strong economic activity and shifting recession expectations.
Three Factors Triggering Panic
Bank of Japan Rate Hike: The Bank of Japan raised interest rates, strengthening the yen. Japan has long maintained low or negative interest rates, encouraging investors to borrow yen to buy U.S. bonds or stocks for profit. This move diminished the appeal of yen carry trades, prompting investors to withdraw from high-risk assets, leading to a global market sell-off.Weak U.S. Economic Data: Last Friday, U.S. employment data was released, including a spike in the quit rate, triggering the "Sahm Rule" recession signal. This rule suggests that when the three-month average of the U.S. The national unemployment rate rises at least 0.5 percentage points above its low over the past 12 months. The economy is in an early recession stage. The market's expectation shifted from a defensive rate cut by the Federal Reserve to anticipation of a recession.Geopolitical Risks: On August 4, news broke of an expected attack by Iran on Israel. Geopolitical risks increased global economic uncertainty and market volatility.
Amid macroeconomic panic, Jump Crypto's sell-off exacerbated volatility in the cryptocurrency market. According to Lookonchain's monitoring, Jump Trading is selling 120,695 wstETH (worth $481 million), having sold 83,000 wstETH ($377 million) since July 24, leaving 37,604 wstETH ($104 million) remaining. These 120,695 wstETH ($481 million) were funds recovered by Jump following the Wormhole exploit.

Trump's Remarks
Former U.S. President Donald Trump posted on his social media platform Truth Social: "The stock market has crashed, employment numbers are terrible, and we are heading towards World War III."

Trump further commented that a significant stock market decline is understandable, and what follows is the "Great Depression of 2024."
He linked the stock market crash to Vice President Harris, suggesting that more voters should believe the U.S. economy is on the brink of collapse, for which President Biden and Vice President Harris should be held accountable. He also implied that electing him would reverse the economic downturn.

Cryptocurrency Market Trends
BTC and ETH have both passed spot ETF approvals this year, becoming increasingly correlated with U.S. stocks. As macroeconomic data emerges, the Fed's rate cuts loom, geopolitical conflicts, and the upcoming U.S. elections, the factors influencing the market are intensifying. The cryptocurrency market's trajectory closely follows U.S. stocks, with trading impacting prices and expectations influencing trading.
Therefore, it is crucial to closely monitor current macroeconomic expectations to gauge the direction of the cryptocurrency market.
#MarketDownturn #BlackMonday #ratehike

In the world of cryptocurrencies, market fluctuations and price predictions are the norm, with Bitcoin often leading the way as the most talked-about digital currency. 

With the recent Federal Reserve interest rate hike impacting financial markets, many are left wondering how this move will affect Bitcoin's trajectory. 

This article delves into the potential of Bitcoin reaching the $30,000 mark in the aftermath of the rate hike, exploring factors that could drive its value and the market sentiment surrounding this popular cryptocurrency.

Banking Collapse Aids Bitcoin in Regaining Positive Momentum

Since the beginning of March, US regulators have closed and sold three mid-sized US banks: Silicon Valley Bank, Signature Bank, and First Republic.

This marks the highest number of failures to affect the US since the financial crisis of 2008.

In Europe, Credit Suisse, a major global player in financial turmoil, is being forced into a rescue plan with competitor UBS. Large-scale customer withdrawals, driven by concerns over the security of their funds, contributed to the collapses.

The banks in the USA, Europe, and the UK are facing a crisis, resulting in a loss of public trust and driving more people towards cryptocurrencies due to their decentralized nature. 

Moreover, US Secretary Janet Yellen stated that the US would reach its debt ceiling in June, which added further pressure on the US dollar and bolstered BTC/USD prices.

Bitcoin Shatters Daily Transaction Record Amid Growing Interest in New Network Technology

Bitcoin recently set a new record for daily transactions as interest in Ordinals, a protocol that expands the applications of blockchain, continues to grow.

According to data from BitInfoCharts, the daily volume of Bitcoin transactions surged to 682,009 on Monday after hitting a previous record of 568,300 the day before. 

This was approximately 78,000 higher than the previous peak reached during the 2017 bull market.

JennieNFT @jennie_nft

The majority of these transactions originated from Ordinals, as it allowed users to embed data into Bitcoin's blockchain, similar to NFT minting. 

The simplicity of investing in cryptocurrency and sending payments internationally contributed to an increase in the user base, resulting in more transactions.

Bitcoin Gains Attention Ahead of Election Cycle

Bitcoin appears to have received additional support from recent comments made by US Presidential candidate Robert F. Kennedy Jr. The Democratic candidate believes the turmoil in the US banking sector is due to the "war on crypto." 

According to him, the SEC and FDIC have no legal authority to wage an additional war on crypto that is damaging the country's major banks. 

He further stated that critics who believe Bitcoin's energy usage is bad are simply misunderstanding the concept. 

Bitcoin Magazine@BitcoinMagazine

The political attention that crypto and Bitcoin are receiving ahead of the upcoming election cycle is also contributing to the market's value.

Bitcoin Price

BTC/USD is showing a positive outlook after falling to 28,250. On the 4-hour chart, Bitcoin has created a bullish engulfing pattern and is currently progressing towards the next resistance level of 29,300.

If BTC demand rises, it may potentially surpass the 29,300 level, exposing it to the subsequent resistance at 29,975. 

On the other hand, BTC might find considerable support around the 50-day exponential moving average, likely providing support near the 28,650 level.

Bitcoin Price Chart - Source: Tradingview

In the event of a drop below the 28,650 level, the downtrend might continue until it reaches the next support level at 27,823. 

If the price declines further below 27,800, the downtrend could persist until the next support level of 27,150.

source: cryptonews

mage source: ai

#BTC #Fed #ratehike #crypto #CDD

Disclaimer

The views and opinions expressed by the author, or any people mentioned in this article, are for informational purposes only, and they do not constitute financial, investment, or other advice. Investing in or trading crypto assets comes with a risk of financial loss.