Feverishness on the stock market and cryptocurrencies: the FED will speak!

Central banks, stocks and cryptos – Whether Bitcoin (BTC) and cryptocurrencies have their own cycles of ups and downs, crypto-assets of course remain linked to the macroeconomic context. And the latter is more than febrilewith the desperate struggle of central banks against the onset of hyperinflationwhich they created themselves with massive money prints. The upcoming decisions of the Federal Reserve (Fed) are of particular concern to financial market players.

Federal Reserve: Will or will it not raise its key rate?

To print money supply for compensate for “whatever the cost” the losses (sometimes total) due to extreme restrictions related to the Covid crisis. Here is an idea that turns out very bad long-term. Indeed, these excesses of fiat currencies, combined with the war in Ukraine, are causing a inflation prices more than worrying.

With record inflation of 9.1% in June over a rolling year in the United States, we understand that the Federal Reserve already have raised its key rates by 0.75 points June 15, 2022. This Wednesday July 27there is a good chance that it is rebelote.

Indeed, as notably reported by the Financial Times (FT), investors expect the Fed rising again its key rate, probably 0.75 point once again. These rates would then be brought within a range of 2.25% to 2.5%.

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Stock markets are gray, cryptos are not leading the way

These rate hikes are what investors tend to turn away so-called assets “risky” (switch to market sentiment risk off), like the actions of companies and the cryptos.

However, pending the Federal Reserve’s decision on Wednesday, stocks, in particular those of companies europeanbegan to show signs of volatility. As FT reports, Eurozone corporate stocks have first lowered at market opening, before resuming a little, and stagnating back towards the opening prices.

If the Fed does raise rates on Wednesday, fears of hyperinflation will move away. But if these rate hikes were to continue too long/strongly, they could lead to a “deeper and longer slowdown” of the economy, according to a macro-economic specialist quoted by FT. Indeed, investments in companies – and in the crypto projects – would be much more chillyslowing growth and innovation.

The Federal Reserve of the United States – like many central banks, including the ECB in Europe – meet at to play the balancing act between two sticks of dynamite. On the one hand maintain the economy under perfusion because of the latest Covid restrictions (increasing its fiat money supply disproportionately), on the other, prevent inflation with the rise in its key rates. All this without the risk of causing a stock market disaster which would make the 2008 crisis seem like a cakewalk. In the meantime, we’ll have to hold our breath until the Fed does its thing.

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