Cryptocurrency market capitalisation, in the week ending July 29, stayed above $1 trillion even as the US Federal Reserve (Fed) hiked its key interest rate by 75 basis points on July 27. Bitcoin has rallied over 10 per cent since Wednesday and Ethereum has jumped over 15 per cent. However, experts say the crypto market's crisis is not over.
“This should not be considered as Crypto winter is over. We are not there yet. Cryptocurrency is not immune to global factors or economies of the world,” Dileep Seinberg, Founder & CEO, MuffinPay, said.
“This can be considered as a relief rally as the worst was priced in the market and things were not as bad as were expected. A 75 bps rate hike is less hawkish than a 100 bps rate hike,” Seinberg said.
The Fed's 75 basis points rate hike came as a relief to many as policymakers expected a bigger hike due to high inflation. The US central bank, on June 27, also announced that the inflation in the country for June stood at 9.1 per cent, much higher than its upper tolerance level of 2 per cent.
Recession fears had weighed down the markets, across the globe, for the last two weeks. However, Fed chair Jerome Powell in his statement, on Wednesday, said that the US is not in recession, even as the US GDP contracted by 0.9 per cent in the last quarter. He also added that further policy decisions will be based on future numbers.
“The Fed's evasion of questions on bond market pricing and forward guidelines by stating that future monetary policy decisions will be completely data-dependent was characterised as extremely dovish by the market with speculation that peak Fed hawkishness is behind us amidst an ease in commodity prices and other essential goods,” said CoinDCX‘s research team.
At 4pm on Friday, Bitcoin, the largest cryptocurrency by market cap, was trading at $24,048.36, according to coinmarketcap.com. Ethereum, the second largest cryptocurrency, was at $1,720.56. The total market cap of the crypto market was above $1.1 trillion.
Some experts are more optimistic about the crypto market in the coming days.
“They [markets] don't usually react on what happened or what's happening but rather on what might happen in say next 2,4 or 6 months. So, a futuristic view of the market is what is helping the Crypto market in being resilient & reaffirms its bright future,” said Punit Agarwal, founder and CEO, of KoinX.
“If the bull rally continues with limited sell-offs, we might see BTC reaching US$25,000 soon. A broad accumulating trend can break this level. While on the other side, Ethereum has been on a consolidation phase and is moving to test the US$1,800 level. If bulls can hold Ethereum at the current level today, we might see it testing the US$2,000 level in the coming week,” Edul Patel, co-founder and CEO of crypto investing platform Mudrex told Business Standard.