Prices rise despite US recession news
Altcoin prices rose on Thursday despite news of a US recession.
Several coins posted double-digit gains, and others were also well underway as cryptocurrency prices rose across the board for the second day in a row.
UNI to USD
Ethereum Classic is skyrocketing
Ethereum Classic (ETC) was up about 33% around the time conventional markets closed in North America, after posting a 14% gain on Wednesday. (All figures based on CoinMarketCap data.)
Uniswap (UNI) rose 28%, while bitcoin cash (BCH) jumped 25% and thorchain (RUNE) and convex (CVX) were both up 20%.
The increases came even as the US Commerce Department released data showing US GDP fell for the second consecutive quarter, signaling a technical recession.
Fat interest rate increase
The crypto market rose on Wednesday after the US central bank followed up on an expected interest rate increase of 75 basis points.
“It’s also very interesting to see how crypto starts to correlate with the stock market and generally with the planet’s economy,” said Damian Scavo,
CEO at algorithmic trading platform Street beat. “It means that the crypto market is reaching a certain level of maturity.”
BCH to USD
Fed officials were ready
Fed officials were pretty clear that a full percentage point increase was not a viable option, even though the latest consumer price index (CPI), an inflation gauge, was warmer than expected earlier this month, said Mikkel Morch, managing director of digital assets. Investment fund SHEET 36.
Fed chief Jerome Powell communicated the central bank’s position on the rate hike in advance, avoiding a knee-jerk reaction, Mork added.
And the markets had enough time to “digest and price in” a 75 basis point increase.
He said the larger rally in crypto assets in the immediate aftermath of the Fed’s announcement could indicate that market participants were “actually quite scared” of a potential 100 basis point hike and “heaved a sigh of relief” when the actual hike matched the Fed governors’ consensus.
Room for upside
“With the next hike not coming until September, there may be room for upside now – although that will be contingent on the strength of the dollar and the broader macro environment,” Mork said.
He expects the Fed’s next meeting of the Federal Open Market Committee (FOMC) in September, when another rate hike will be considered, to be “much more consequential”.
What is your sentiment on BCH/USD?
Vote to see traders’ feelings!
– We will then have much more clarity in relation to the effect the interest rate increases have had on the economy and whether we are in for a soft or hard landing, said Mork.
“If Jerome Powell ignores the mounting evidence of a recession and [the Fed] continues on its hawkish course, it will be a strong signal to the markets that they cannot count on the Fed to swing before the November mid-term elections. So a rate hike of 75 or perhaps even 50 bps in September is likely to trigger a sharp sell-off in risk assets.”
Bitcoin Exceeds $23,000
At this point, all markets — including crypto — are “adrift,” said Chris Terry, vice president of enterprise solutions for a US-based operator of open lending platforms SmartFi. Until the market breaks either up or down, not much is going to happen.
“We expect bitcoin to continue to trade in this tight range of $20,000 plus minus 10-15%,” he said.
Bitcoin (BTC) passed $23,000 on Thursday, rising 10%. Ethereum (ETH) performed even better as it jumped 15%.
But Terry said the rally in the crypto market stemming from the Fed rate hike and other economic factors should come as no surprise.
“We could be in this deadlocked market for weeks and weeks. Boring,” he said.