Although there were some volatile swings during the day, crypto assets are trading on the upside. Risky assets are reacting to the FED’s decision to raise rates by 25-basis points, and the increasing global adoption might be adding weight to the boost.
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Which Hikes Are You Taking? What Hikes?
Federal Reserve recently raised rates by 25 basis point, marking the first rate increase since 2018. In 2022, six more rate increases are anticipated.
Markets have experienced volatility due to expectations of a more hawkish FED. This is because of concerns about the Russo–Ukrainian conflict, increasing U.S. inflation, and an increase in Covid-19 cases. The crypto market experienced a first down reaction, described by experts as a fake out, before reverting to the upside.
Fox Bussiness Live expert panel stated that FED has been slowing down and that this will not have any impact on the economy. They added that the FED is giving investors a plain field to do well in stocks, “not worrying about the U.S. economy.”
Similar results can be expected for Bitcoin and other crypto-assets, as light interest hikes look positive.
Chair Jerome Powell claimed that “the probability of a recession within the next year is not particularly elevated,” and added, “All signs are that this is a strong economy, one that will be able to flourish — not to say withstand, but certainly flourish — in the face of less accommodative monetary policy.”
NewsBTC reports that the scenario of a 25bps increase looks positive for Bitcoin’s passive position.
As many believe the FED’s dovish move comes as a late reaction and will do little to nothing to the U.S. inflation, investors might be taking refuge in Bitcoin as it has happened before. Inflation is expected to remain high at 4.3% by the end of 2022, above the Fed’s annual target of 2.3%.
The bank is a losing place for purchasing power. As such, people will start to use Bitcoin as a form of insurance against future losses. Cameron Winklevoss was the cofounder of Gemini. arguesBitcoin is the best method to protect yourself against rising inflation.
“Imagine paying a money manager 7.9% a year to do absolutely nothing with your money. That’s what inflation is. It’s a hidden management fee that comes with no return. If you have USD cash today, the US government is paying 7.9% for nothing. Scary.”
Ukraine implements crypto regulation
In the midst of the Russo Ukrainian war, crypto was also looking like the only viable option for the people who were affected by the sanctions and invasion.
In many ways, crypto assets were a boon to Ukraine during wartime. Over $108 million has been donated in crypto-assets. According to reports, people have been able use digital coins to take with them their money when fleeing Ukraine.
It is also expected that crypto regulation will be clear in America and elsewhere. Many politicians are taking stances in favor of cryptocurrencies, and Ukraine’s president Zelensky is not lagging behind.
Volodymyr Zelensky just signed a law “on virtual assets” to legalize crypto. An official statement says that this law “creates conditions for the launch of a legal market for virtual assets in Ukraine.”
“The signing of this Law by the President is another important step towards bringing the cryptocurrencies sector out of the shadows and launching a legal market for virtual assets in Ukraine.”
Alex Bornyakov (Deputy Minister for Digital Transformation), is the spokesperson. expressed that they believe “that crypto industry offers new economic opportunities. We will do our best to bring the bright new future closer as soon as possible.”
Although cryptocurrencies do not have legal status in Ukraine, crypto owners are legally protected. The positive sentiment is growing in many countries and politicians, which may lead to an increase in institutional adoption of cryptocurrency.
Because both Russians as well Ukrainians were in desperate need of an alternative to traditional financial institutions, they also turned to stablecoins and bitcoin for refuge.
Russians might be looking for a place to hide their devalued ruble, and crypto could help them. It sets an example for others and may lead to a favorable market outcome.
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