Crypto bounces back after post-Fed selloff, investors shrug off regulatory concerns
The crypto market has been battered this year, with over $2 trillion wiped from its value since its peak in November 2021. Cryptocurrencies have been under pressure after the collapse of major exchange FTX.
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Cryptocurrency prices surged on Thursday as investors digested the prospects of the Federal Reserve’s rate hike campaign and the ongoing crisis in the banking system.
The price of bitcoins rose more than 4% to $28,290.71, according to Coin Metrics. Ether added nearly 5% to trade at $1,822.50.
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The crypto rose along with other risky assets. All three major stock indexes were higher the day after their Fed-induced selloff in the previous session.
Traders were digesting the latest update from Wednesday’s central bank meeting and “reconciling uncertainty with opportunity,” said Sylvia Jablonski, CEO and chief investment officer at Defiance ETFs.
On Wednesday, the Fed raised rates another 25 basis points, as expected, and hinted that the end of its inflation-fighting hikes may be coming to an end. Still, stocks and crypto sold off at the end of the day.
“The Fed did what the market wanted and suggested the ongoing rate hikes might not be necessary and acknowledged the deflationary work that recent banking meltdowns would help bring inflation down,” Jablonski said. . “A Fed looking to pause should generate positive momentum for risk and growth assets like tech stocks and crypto. … In short, uncertainty remains in monetary policy and the impact of rates on the economy in terms of whether or not we see a recession.”
The market also seemed to ignore bad news regarding the “unhealthy regulatory environment” in crypto. Late Wednesday Coinbase received a Wells notice from the Securities and Exchange Commission, warning the company that it may have violated securities laws. On Thursday, the SEC issued an investor alert on crypto assets.
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