Sky-high interest rates are exactly what the crypto market needs
We can no longer rely on central banks to prop up our investments, which means learning to look at the health of the companies and products in which we invest.
The United States Federal Reserve Open Market Committee’s September decision on interest rates was entirely expected, with the FOMC holding rates at the current level of 5.25% to 5.5%. As also expected, the committee indicated there may be another rate hike coming this year, with Chairman Jerome Powell insisting — as usual — in his Sept. 20 press conference that the job of getting inflation back to the Fed’s 2% target is in “no way done.”
What was more of a surprise, however, is the fact that the Fed raised its long-term forecast for the Federal Funds Rate, which they now see as standing at 5.1% by the end of 2024 — up from June’s prediction of 4.6% — before falling to 3.9% at the end of 2025, and 2.9% at the end of 2026. These numbers are notably higher than previous forecasts and indicate a “higher for longer” scenario for U.S. interest rates that not too many market participants were expecting.
As such, we saw markets pull back slightly, with the S&P 500 trading down 0.80% shortly after the announcement, followed by the NASDAQ, which fell 1.28% — a big tumble for these headline indexes. Cryptocurrency markets also responded negatively, with Bitcoin (BTC) falling below $27,000 and Ether (ETH) falling nearly 2% to just more than $1,600 shortly after Powell wrapped up his press conference.
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