Most cryptocurrency shares fell over the weekend in preparation for a potentially turbulent week for digital assets and stocks. The Federal Reserve will hold a meeting in July, with another major rate hike and more important economic data coming later. week.
The world’s largest cryptocurrency price in the last 24 hours, Bitcoin (BTC -4.37%)It was down about 2.6% on Monday at 9:13 am.Price Ethereum (ETH -5.54%) Reduced by more than 3%, meme tokens Shiba inu (SHIB -4.52%) It fell 3.5%.
As with many high-tech stocks and higher-risk assets this year, inflation has skyrocketed this year and the Federal Reserve has rapidly raised the federal funds rate, the benchmark overnight lending rate, so crypto prices are I was hit. Risky assets usually do not work in the face of rising interest rates, as yields on safer assets rise and demand more returns on growth assets that were previously traded on a premium valuation. ..
On Wednesday, the Fed’s rate-setting committee is widely expected to raise the federal funds rate by another 75 basis points (0.75%), but investors are wondering how the Fed sees the economy and future rate hikes. Looking for clues to the Fed’s comments for the rest of the year. The more hawkish Fed can cause problems with stock market and cryptocurrency prices. However, asset prices can react positively if the Fed feels more reassured about the inflation situation and future economic outlook.
“But this week works, but I think today will be the most calm day of the week. [for crypto]”OANDA analyst Jeffrey Halley wrote in a recent research note.
Along with more earnings reports, another big event will occur on Thursday that may affect cryptocurrencies and broader market activity. The US Department of Economic Analysis releases estimates of gross domestic product (GDP) growth for the second quarter of this year.
In the first quarter of this year, US GDP fell 1.6% after growing nearly 7% in the fourth quarter of 2021. The second consecutive quarter of negative GDP growth technically marks a recession. Goldman Sachs Earlier this month, we adjusted our second quarter GDP estimates to around 0.7%. This allows the United States to barely get out of the technological recession.
The strong labor market and most major US banks reported strong consumer spending in the second quarter, so it doesn’t feel like the US economy has fallen into recession, but the market has just begun to slow down. There is a possibility to overlook. High-risk assets such as cryptocurrencies.
In the short term, we could see crypto prices moving in both directions. Fewer hawky Feds and higher-than-expected second-quarter GDP growth could help the Fed curb inflation and make landings softer than many expected in recent months. May show the market that there is.
That would probably be a good omen for crypto prices. However, more hawkish comments and weaker economic data could lead to downward movements.
In any case, Bitcoin and Ethereum are gaining in adoption around the world, and I think they are still good long-term investments given the actual use cases. Shiba Inu does not seem to have a technical or basic investment treatise. Therefore, I avoid meme tokens.
Bram Berkowitz has positions in Bitcoin and Ethereum. Motley Fool belongs to and recommends Bitcoin, Ethereum and Goldman Sachs. The Motley Fool has a disclosure policy.