Key points:
- Fed Hikes Again And Stays Hawkish
- Risk Assets And Cryptocurrencies Move Lower
- Jamie Dimon Attacks Cryptocurrencies Again
Fed Hikes Again And Stays Hawkish
As anticipated, with the conclusion of their September meeting on Wednesday, the Federal Market Open Committee (FOMC) hiked interest rates by 0.75%. In addition, the Fed set a still very hawkish tone, projecting a more aggressive path ahead for interest rates in its efforts to bring down extremely high levels of inflation.
The rate rise took the official interest rate to a range of 3.00-3.25%, but the forward guidance was of a notable concern for markets. FOMC members are now looking at further increases for the balance of 2022, projecting rates would be at 4.40% by year-end, then as higher as 4.60% by the end of 2023. Furthermore, Fed Chairman Jay Powell refused to rule out a recession in the US.
Also Read: Cryptocurrency, NFTs, or Shares – Which Is the Better Long-Term Investment?
Risk Assets And Cryptocurrencies Move Lower
The 75bp interest rate hike and the hawkish outlook from the Fed kept risky assets in a more negative phase, suffering further price losses on Wednesday after the decision. The major US equity averages, the Dow Jones Industrial Average (DJIA), the S&P 500 and Nasdaq lost between 1.7% and 1.8% during the session in erratic trading on Wednesday. With the cryptocurrency space currently positively correlated with risky assets, and notably with the Nasdaq, most crypto coins were trading lower after the Fed announcement and press conference but stabilising in Thursday trading.
Critical now for most cryptocurrencies will be the ability to defend support factors, in some instances, the more recent lows posted in September, but in some cases, markets are now challenging support levels established through the bottoming activity that has developed since the summer. Moreover, the risk is that cryptocurrency markets could potentially test the 2022 bear market lows, many of which were posted in June of this year.
For Bitcoin (BTC), the December low is at 18273 and the June low is 17604, whilst for Ether (ETH), support is seen at lows from July at 1006/997 and the bear market low from June is at 880. For more technical insights, forecasts and price projections, see our report here.
Jamie Dimon Attacks Cryptocurrencies Again
Jamie Dimon, the JPMorgan Chase & Co. Chief Executive Officer, was back on the anti-cryptocurrency criticism platform on Wednesday. in congressional testimony, Dimon stated, “I’m a major sceptic on crypto tokens, which you call currency, like Bitcoin,” adding “they are decentralized Ponzi schemes.”
He went on to say, however, that JPMorgan is active in blockchain and that stablecoins, which are digital assets tied to the value of other currencies, typically the US dollar, given the proper regulation, would not be problematic.
The congressional hearings come in the process of House Financial Services Committee Chairwoman Maxine Waters and Ranking Member Patrick McHenry working to reach an agreement on stablecoin legislation.
In 2017, Dimon infamously labelled Bitcoin “a fraud,” comments he later stated that he regretted, though he seems to still not be a big fan of the cryptocurrency world.