The Federal Reserve hiked interest rates at 75 BPS on Wednesday for four consecutive times this year. The interest rates have reached 4% and Goldman Sachs reported that the Feds will raise interest rates to 5%. The Feds remain hawkish to tame rising inflation as Jerome Powell said there was a “need for ongoing rate increases”. Both the stock and crypto markets reacted to the interest rate hikes and are in the red on Wednesday.
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Why Are The Crypto Markets Falling Today?
The crypto markets are backtracking after a week of rallying as Dow Jones plummeted 505 points on Wednesday. The stock market crashed after the Feds hiked interest rates at 75 BPS wiping out $860 billion in a day. In addition, the S&P index lost 97 points falling 2.5%, and ended the day at 3,759.
Nasdaq slipped 366 points shedding 3.4% and ending the day’s trade at 10,524. Since the stock markets are in choppy waters, the ripple effect can be witnessed in the crypto markets.
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The consecutive hike in interest rates is showing signs of an economic slowdown. The purchasing power among people is taking a hit as inflation remains the same despite the Feds’ hawkish stance.
The housing market is seeing a decline as mortgage rates have nearly doubled in 2022, making it impossible to afford a home. The fixed 30-year mortgage reached 7.08% in November from 3.85% in March 2022.
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Therefore, the ongoing economic baggage is dampening both the stock and crypto market’s prospects in the indices. Bitcoin has started to slip and reached close to reaching $19,000 levels today as it came close to $20,064.
Ethereum is down nearly 3% today and is flirting to go below the $1,500 mark. ETH came close to $1,506 in the day trade and if the markets continue with the downturn, both BTC and ETH could fall below $19K and $1.5K, respectively all over again.
At press time, Bitcoin was trading at $20,355 and is down 0.8% in the 24 hours day trade. On the other hand, Ethereum was trading at $1,551 and is down 2.6% in the day’s trade.