New reports coming out from the US Federal Reserve have shaken a wide basket of crypto coins and defi assets.
After renewed indications that Jerome Powell and crew may raise rates more than expected in 2022, we saw Ethereum slump 3.5%, and Bitcoin slide down around 9%.
Ether turned lower after the minutes were released, dropping by over 13.50% to as low as $3,300,” writes Yashu Gola at Cointelegraph, going over the ETH plummet in more detail. “Its plunge mirrored similar downside moves across the crypto market, with Bitcoin (BTC) shedding a little over 9% to nearly $42,100. Incontestably, ETH/USD returned more losses to its investors than BTC/USD after the Fed’s announcement. It appears traders decided to unwind tokens sitting atop better long-term profits than Bitcoin. For instance, Ether’s returns in the last 12 months — even after the Fed-led drop — came out to be around 175%. On the other hand, Bitcoin’s profits were nearly 15.75% in the same period.”
Elsewhere in the crypto market, some of the lesser-known newfangled tokens and coins were not immune to the decrease pressure: Solana, a new protocol for defi smart contract functionality, decreased 13%.
Analysts looking at why the Fed and the FOMC may be looking to counter inflation cite a 40-year high in the consumer price index late last year.
“There’s a real risk now, I believe, that inflation may be more persistent and…the risk of higher inflation becoming entrenched has increased,” Powell said recently after an FOMC conference, as reported by Gola.
Gola also quotes a JP Morgan analyst in response:
“Growth and inflation will be decelerating throughout 2022, but nonetheless remain above historic trend levels,” says JPM employee Madison Faller. “We think this will call for a much lower risk of a Fed-induced material market correction.”
Do the research, and make your plays accordingly
