Last week, the crypto market looked slightly bullish until the US Federal Reserve Bank announced its interest rate decision. The Announcement of rate hike by 75 points by the US Fed reserve caused a lot of volatility in trading, as usual. The rate increase also resulted in liquidations in the traditional market.
However, the US Dollar Index (DXY) continued to rise, hitting a 12-month high of 113.22. By the weekend, most US stock indices are down around five percentage points, almost reaching their June 2022 lows. Ethereum and most other altcoins also saw prices lower, as in the traditional market.
The good news is that the price of the leading digital asset (Bitcoin, BTC) only fell a little. Initially, the price of Bitcoin fell to $18,153. However, it recovered and moved against the Dow Jones Industrial Average (DOW30). It is notable that the highly volatile cryptocurrency and the US tech stock market, NASDAQ, were not greatly affected by the Fed rate hike. Therefore, investors can still consider Bitcoin as a reserve of worth. However, in the coming weeks, the price action of Bitcoin will confirm this perspective.
The president of the ECB and the president of the US Fed will publish new statements
On Tuesday, September 27, 2022, Christine Lagarde (European Central Bank, President of the ECB) and Jerome Powell (head of the US Fed) will share their views on the current state of monetary and economic policy. The insights of these two will be crucial as they will determine whether the EU, the US or both are changing their stance on interest rate policy.
Any announcement of a change in monetary and economic policies by one or both of these financial watchdogs to curb rising inflation will have an impact on the financial markets (cryptocurrencies and stock market). Another crucial piece of data affecting financial markets this week is the influx of orders for durable goods.
The US Census Bureau will release this data by 2:30 p.m. (CET) on Tuesday, September 27, 2022. These data indicate the increase or decrease in demand for industrial goods last month. Analysts forecast a reduction of 0.5 percentage points. Durable Goods Orders fell 0.1% in July 2022.
It is important to note that whenever the Durable Goods Orders data is higher than anticipated, the US Dollar generally tends to be bullish. On the contrary, when these data are lower than analysts’ prediction, the US dollar usually falls, even if it is for a short period. Recently, a weakening US dollar resulted in an increase in the price of Bitcoin and other cryptocurrencies.
Meanwhile, crypto market sentiment remains in “extreme fear” for over a week. As of September 26, the average measure of crypto market sentiment, the Crypto Fear & Greed Index, is at 21, with 25 being the cutoff for extreme fear. However, crypto analytics firm Santiment noted that Bitcoin’s social dominance had reached a new peak in two months. Santiment further points out that this renewed interest could have a positive impact on the main asset of cryptocurrencies.
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