Fed chair Jerome Powell who took a very hawkish stand at the annual Jackson Hole speech. The annual get together is hosted by the Kansas City Fed and it envisages big Whigs of the economy huddling together to hammer out the Fed’s economic policy for the next year. However the aggressive statements by the Fed Chair about Interest Rate is sending shivers down the Crypto Sector spines who are now bracing for another crypto crash.
Experts like the founder of BubbaTrading.com Todd Horowitz believes that the Fed will hike the interest rates by 100bps considering the surging CPI figures. If this happens then there will be another episode of a blood bath in the crypto sector which has already lost more than half its value in the great crypto mayhem in June.
Interest Rates Provokes Crypto Markets Crash
Latest data does not seem to indicate that the high inflation is showing signs of ebbing. So, it can be expected that the Fed will try to deflate the surging inflation by some hard-hitting economy policy and one of the routes is an interest hike. The quantum of interest hike will decide the intensity of crypto crash.
A bigger than expected interest rate hike will cripple the crypto market and lead to a blood bath. The experts are expecting a repeat of the June mayhem when the crypto sector reacted to a 75 bps interest hike to tank to nearly 50% of its values.
The recent CPI data did not create much movement in prices and it seems that the high inflation is flattening. There was a general feeling that since the inflation is cooling down the Fed will not resort to extreme measures. This led to a rally in the crypto sector.
However, of late Fed officials have taken a hawkish posture and Neel Kashkari of Minneapolis called for a Volcker-esque stance from the Fed. Volcker is well known for his hawkish stance, a stance which led to the great recession of 2008. With James Bullard of St. Louis and With Jerome Powell openly taking an aggressive stance there is pain in store for households and the crypto sector alike.