on the crypto
As the US midterm election approaches and world economies free-fall into recession, there are signs that the Federal Reserve will either reduce future rate hikes or enter pause mode. The cryptocurrency has the potential to make money in this context.
Another big rate hike?
The next Federal Reserve FOMC meeting will be held in early November, just days before the US midterm election. Another 75 basis point rate hike seems likely.
According to Reuters, Fed chairman Jerome Powell said there is still a lot of "pain" to deal with. The Reuters article further states that the poll conducted among economists following the previous FOMC meeting revealed that 70% of them are convinced that the Fed will make another 75 basis point hike in November - the fourth consecutive hike of that. entity.
Economists appeared more than optimistic about the risk of the United States falling into recession. According to a survey conducted in early September, the likelihood of this happening is only 55% for the next two years. Some economists have already told mainstream media that they believe the United States is already in a recession.
End of the excursions in sight
A majority of economists surveyed by Reuters believe the Fed funds rate will peak at "4,50% -4,75% or more" in the first quarter of 2023. Reuters also quoted Justin Weidner, an economist at Deutsche Bank, which believes the rate will peak at 4,75% -5,00%.
Even if the Fed funds rate were to hit a peak of 5%, it would appear that the end is in sight. Also, given the insane strength of the US dollar versus other fiat currencies, if rate hikes continue at their current pace, it is safe to expect falls nationwide.
The British pound is an example: recently the Bank of England had to intervene to support the currency, the bond market and pensions, reversing the course and implementing quantitative easing. With other countries on the brink of collapse, this path could be mimicked, making it extremely difficult for the Fed to maintain its tightening policy.
The Fed's slowdown could give a signal to cryptocurrencies
Of course, by the time the Fed "blinks" and begins to reduce or even suspend its tightening policy, this could mark a period of market recovery. Given that bitcoin and cryptocurrencies were the first asset class to experience a steep drop in prices, one might expect cryptocurrencies to be the first asset class to exit the bear market to enter a new bull market.
Of course, the world's financial organizations are doing their best to prepare for overwhelming regulation, but assuming cryptocurrency is able to survive all of this, bitcoin could at least be a very attractive place for investors. Investors to leave the banking system with at least part of their wealth.
