Oluwapelumi Adejumo
With the Federal Open Market Committee (FOMC) scheduled to meet on Wednesday, some analysts expect the committee to raise the interest rates aggressively in order to combat the rising inflation.
According to a Reuters report, inflation reached a 40-year high in March at 6.6 percent, which is three times the Feds’ target. Based on this pattern, the Bank is expected to hike interest by half-point at each of its next three meetings.
Others, who share similar sentiments about rising inflation, include Dutch multinational banking and financial services corporation ING Group whose chief international economist James Knightley wrote in a report that it expects a rise of 50 basis points on Wednesday.
“Inflation worries outweigh temporary GDP dip,” the report states. The speculation about interest rate hikes has had a telling effect on sectors of the economy, with the stock and crypto markets performing poorly.
Rising inflation and crypto market crash
In April, the stock market experienced its worst month since March 2020, with S&P losing 8.8 percent, Nasdaq 13.3%, and the Dow 4.9 percent. Ultimately, the Nasdaq has had its worst four months start to the year in more than 50 years.
The performance is not totally different from the crypto industry whose market cap also witnessed a somewhat steady decline during this period. The crypto space had its market cap above $2 trillion at the start of the month, but it ended the month around the $1.7 trillion range.
Flagship digital assets including Bitcoin and Ethereum also witnessed a decline of 16.4% and 15.8% in their values, respectively.
Prior to the debut of BAYC’s Otherside mint, ApeCoin witnessed its price surge, despite its having lost 24% of its value within the last 24-hours.
According to a previous Be[In]Crypto report, the correlation between the performance of crypto and the stock market shows that the larger financial world is diving deeper into the industry. Bitcoin’s 30-day correlation with big tech stocks has climbed to July 2020 levels, with its correction to gold plunging to all-time lows.
However, unlike BTC, GOLD has performed quite well. According to Bitfinex market analysts, there’s a current FUD in the crypto market that’s reminiscent of the bear market vibes of 2018.
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