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Crypto Jumps Post Fed With Wider “Risk On” Move

Steve Miley trader
Updated 28 Jul 2022

Trade Crypto Here Your Capital Is At Risk

Key points:

  • Crypto Markets Broadly Higher Post-Fed Decision
  • Markets Rally With Wider “Risk On” Move
  • Powell Signals Possible Slowing Of Rate Hike Pace

Cryptocurrency markets broadly rallied on Wednesday, not so much after the Federal Open Market Committee (FOMC) decision and statement on interest rates, but rather after the press conference with Fed Chair Jerome Powell (as we highlighted in our report yesterday. This bullish move higher for crypto markets came alongside a wider “risk on” move as Powell signalled at the press conference the potential for a slowdown in the pace of rate hikes.

Crypto Markets Broadly Higher Post-Fed Decision

The cryptocurrency markets were widely trading higher after Wednesday’s announcement by the US Federal reserve of a 0.75% interest rate rise. This was broadly in line with expectations and saw the crypto market leader, Bitcoin (BTC), surge over 10%. Ether (ETH) also rose 16%, with Polkadot (DOT), Solana (SOL) and Polygon (MATIC) all posting notable gains too.

Also Read: Cryptocurrency, NFTs, or Shares – Which Is the Better Long-Term Investment?

Markets Rally With Wider “Risk On” Move

This move higher in crypto markets was aligned with a favourable move in US (and global) stock averages which saw the tech-heavy Nasdaq leap just over 4% and the wide US benchmark, the S&P 500 add-on 2.6%. This wider “risk on” comes as no surprise, as the US equity indices and cryptocurrency markets have been positively correlated (moving in the same direction) throughout 2022.

With US and global stock averages having signalled intermediate-term bottoming patterns, the threat through the summer is for higher prices and potentially for similar gains in cryptocurrency markets.

Powell Signals Possible Slowing Of Rate Hike Pace

The main reason for the positive move in riskier assets was that Fed Chair Jerome Powell said, “As the stance of monetary policy tightens further, it likely will become appropriate to slow the pace of increases while we assess how our cumulative policy adjustments are affecting the economy and inflation.” He effectively left the door open regarding the size of the Fed’s next rate move at its September meeting.

Steve has 29 years of financial market experience including 3 years at Credit Suisse and 15 years at Merril Lynch. Steve is the Academic Dean for The London School of Wealth Management and has won many awards from Technical Analyst Magazine.