Bitcoin, Ether Decouple From Stocks: What’s Next for Crypto After Fed Rate Hike?

Photo by Dmitry Demidko on Unsplash

In the world of finance, the U.S. Federal Reserve is a key player whose decisions can significantly impact the global markets. Over the past 14 months, the Fed has implemented a monetary tightening cycle, including 10 consecutive interest rate increases, which has taken the federal funds rate to 5.25%. This tightening cycle has also had a significant impact on the world of cryptocurrencies, particularly bitcoin and ether. In this article, we’ll take a closer look at what the recent decoupling of bitcoin and ether from traditional assets means for the future of crypto after the Fed rate hike.

Declining Volumes and Reduced Activity

One of the first things to note is the declining volumes for both bitcoin and ether. These volumes have been trailing their 20-day moving averages, indicating that investors are staying on the sidelines to a certain extent. This reduced activity implies that economic data points are having a muted impact on digital assets. In other words, investors are taking a wait-and-see approach to the market. This reduced activity also suggests that bitcoin and ether may trade within a range, absent any specific catalysts. While this scenario won’t provide a lot of immediate alpha, it also won’t lead to significant downside misery.