The latest interest rate hike of the Fed is 0.25%, with an increased rate unchanged from the January adjustment. The current Fed interest rate is 5%, 4.5% higher than last year, the highest interest rate since the 2008 financial crisis.
With the latest adjustment, US financial analysts expected the target interest rate at the end of 2023 to be only 5.1%, and 2024 to be 4.3% – showing that the period of raising interest rates may be coming to an end.
With the US facing the risk of a crisis in the banking industry after the collapse of three major banks this March (Silvergate, Silicon Valley, Signature), analysts have come to the conclusion that the Fed is under pressure, and could not resume interest rate hikes to control US inflation.
After the announcement, securities immediately dropped sharply. Shares of regional banks were also on fire. The S&P Regional Bank ETF fell more than 5% on Wednesday.
Bitcoin price reacted positively by rallying to $28,866 before the Fed raised interest rates by 0.25%. However, it fell more than 7% to $26,601 following Fed Chair Powell’s statement before recovering to the current level of $27,400.
The crypto market also recorded nearly $174 million in derivatives liquidations in the hours before and after the Fed’s rate hike, with half of that coming from Bitcoin. The rate of long orders being burned reaches 82%.
The altcoin market turned down along with BTC. Leading the decline are Huobi Token (HT) and Tron (TRON) having lost about 10% of their value in the past few hours.
In the top 10, XRP (XRP) also evaporated more than 7%. However, on a 7-day timeframe, the token still maintains a rally of over 18%.
Other altcoin projects such as Kava (KAVA), EOS (EOS), Flow (FLOW), Stellar (XLM), BitDAO (BIT), Rocket Pool (RPL), Bitcoin Cash (BCH), … all turned down from 4 -8%.
About the second largest cryptocurrency, Ethereum (ETH) also faced intense selling pressure, causing the token to plunge from the intraday high at $1,821 to a local bottom area at $1,717, before recovering slightly, and is currently trading around $1,740, down 2.8% over the past 24 hours.
On the optimistic side, the latest forecasts point out that there will only be one more rate hike this year. However, Fed Chairman Jerome Powell said in a press conference that the war on inflation is far from over.