Cryptocurrency market Trades higher after the publication of inflation data from the United States of America that improved the rates of the Federal Reserve (Fed), lowering expectations.
The cryptocurrency market rose 6% after the publication of inflation data in the United States, which improved expectations of an interest rate cut by the Federal Reserve (Fed). Bitcoin touched $18,000 before settling at $17,700. However, the strong rise in Ethereum was notable, up to 6%, surpassing the $1,300 mark. Other cryptocurrencies that rose into the top ten were XRP (4 %), Dogecoin (5 %), and Polygon (4 %).
Because these numbers give an indication of the level of inflation in the U.S. economy, the Federal Reserve typically responds by raising or lowering interest rates.
The Federal Reserve has recently raised rates at an unprecedented pace to contain inflation. Given the signs of slowing inflation and the Fed's recent proclamations last month, it is likely to continue raising rates, but perhaps not as consistently. The previous rises remained close to 0.75%, while the next one will likely approach 0.5%.
The rate hike affects small businesses, individuals, equities and even cryptocurrencies. When interest rates rise The cost of bank loans increases as debt becomes more expensive. At the same time, money in savings accounts can begin to generate attractive income with much less risk than in the stock market.
So in the economy, when interest rates rise, money slows down because it doesn't move freely as if it were trying to earn higher returns.
Concern in the market The news of the arrest of FTX CEO Sam Bankman-Fried and the suspension of USDC withdrawals does not appear to have drastically affected the price of cryptocurrencies.
What seems to worry the market is the possible money laundering investigation into Binance. According to Reuters, the Justice Department has been examining Changpeng Zhao's platform since 2018 and is divided on whether to pursue criminal charges over the world's first “exchange.”
“The platform elevators highlight the uncertainty and weakening confidence in the space, a desperation not to get caught up in another FTX event. Even when the situation seems very different. But that's what fear does, especially in a situation where confidence has been significantly affected, like in recent weeks,” said Craig Erlam, senior market analyst at Oanda.
