With the macroeconomic landscape remaining wobbly, countries across the globe have been adopting different measures to bring back their respective economies on track.
The US Federal Reserve, on its part, continues to remain hawkish. Just last week, it announced another 75 bps interest rate hike. Even though investors expected the said outcome, they did not receive it well. Several stalwarts have openly criticized the move, with FTX’s CEO Sam Bankman-Fried being the latest one to do so.
The exec recently opined that the Fed was the “core driver” of the downturn, by aggressively increasing interest rates to help fight inflation. This, as per Bankman-Fried, has led to a “recalibration” of the expectation of risk with crypto.
Fear lingers in the minds of crypto investors
The exec, however, swapped to neutral gear and acknowledged the difficulty of what the regulator was trying to do. He stated that it is “caught between a rock and a hard place.” Even so, he asserted that his outlook for his business is now dependent on decisions the Fed will make in the months ahead. He said,
“Literally, markets are scared… People with money are scared.“
Since the second week of June, the global crypto market cap has shrunk by close to 40%, with Bitcoin and Ethereum instigating the crypto bloodbath. During the weekend, the king coin dipped to $17.6k, while the alt king crashed below $1000, to $881. Resultantly, the fear and greed index reading also stooped down to multi-month lows, justifying the said narrative.
Alongside the price dips, companies like 3 Arrows Capital and Celsius are in a fix. Per Bankman-Fried, being there for one another and helping contain losses during such situations is the right way forward. Elaborating on the same, he said,
“I do feel like we have a responsibility to seriously consider stepping in, even if it is at a loss to ourselves, to stem contagion. Even if we weren’t the ones who caused it, or weren’t involved in it. I think that’s what’s healthy for the ecosystem, and I want to do what can help it grow and thrive.”