Fed's Rate Decision Impacts Crypto Markets
Fed Rate Decision and its Ripple Effect on Crypto Markets
The recent Federal Open Market Committee (FOMC) meeting sent ripples through the financial world, impacting both traditional and crypto markets. To gain deeper insight, we spoke with Dessislava Aubert, Senior Research Analyst at Kaiko, on the "Markets Daily" podcast.
Listen to the full podcast here.
Market Reactions to the FOMC Decision
Aubert explained that while inflation is decreasing, the Fed requires more data before considering rate cuts. This announcement led to a nearly 2% drop in Bitcoin immediately following the meeting. Equities also traded softer, reflecting a broader market response.
While rate cuts are expected later in the year, the market's initial optimism was tempered. Aubert noted that expectations for March rate cuts fell from over 50% to 36% post-announcement.
Future Market Outlook and Correlation with TradFi
Looking ahead, Aubert anticipates continued volatility until more certainty surrounds rate cuts. However, she believes the strong US economy allows the Fed some leeway to wait. The recent strong GDP and job market data support this view.
Regarding the correlation between crypto and TradFi, Aubert highlighted that while Bitcoin's correlation with the NASDAQ was around 60% in 2022, it has since decreased significantly, nearing zero. The current crypto market narrative is heavily influenced by ETF expectations, alongside the macro environment.
Altcoin Revival and ETF Expectations
Aubert observed a revival in altcoins, with trading volumes exceeding $10 billion, indicating increased market participation. She believes that the macro backdrop and the approval of spot Bitcoin ETFs will boost altcoin inflows, particularly in the long term.
The potential approval of a spot Ether ETF in May is another significant factor. While the market anticipates similar products for Ethereum, the derivative markets have yet to reflect this fully.
Strengthening the Crypto Ecosystem with Codeum
Building and securing blockchain projects is crucial. Codeum offers a range of services including smart contract audits, KYC verification, custom smart contract and DApp development, tokenomics and security consultation, and partnerships with launchpads and crypto agencies. Let Codeum help you navigate the complexities of the blockchain world and protect your project from vulnerabilities.
About the Podcast
This episode of "Markets Daily" was hosted by Jennifer Sanasie. Executive Producer: Jared Schwartz; Producer/Editor: Eleanor Pahl; Senior Booking Producer: Melissa Montañez; Original Music: Doc Blust and Colin Mealey.
Disclaimer: This transcript is not edited and may contain errors.