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Bitcoin, Ethereum fell sharply after the Fed hinted at further interest rate hikes 😵💫
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How the Fed's rate hikes could affect stocks, cryptocurrencies and other investments
“Cryptoassets were once viewed as inflation hedges, but recently they have behaved more like other risk assets such as stocks, and higher interest rates will be a headwind for cryptoassets going forward.”
In fact, cryptocurrencies responded to reduced liquidity like other risk assets, falling when the Fed announced its intention to raise interest rates in November 2021, and then falling throughout 2022 as the Fed aggressively followed up. On top of that, high-profile plunges in individual cryptocurrencies and exchanges like FTX have dampened trader confidence in these virtual assets.
“Cryptoassets were once viewed as inflation hedges, but recently they have behaved more like other risk assets such as stocks, and higher interest rates will be a headwind for cryptoassets going forward.”
In fact, cryptocurrencies responded to reduced liquidity like other risk assets, falling when the Fed announced its intention to raise interest rates in November 2021, and then falling throughout 2022 as the Fed aggressively followed up. On top of that, high-profile plunges in individual cryptocurrencies and exchanges like FTX have dampened trader confidence in these virtual assets.
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