Market Wrap: BTC, Stocks Rally in Late Session Following Fed’s Rate Increase

Bitcoin and equities rallied late in the session, suggesting rate hikes may be mostly priced in and may not push markets down in the future

article-image

Jerome Powell, chairman, Federal Reserve; blockworks exclusive art by Axel Rangel

share

key takeaways

  • Bitcoin, ether and other cryptos had a rocky day but later rallied as well, with bitcoin retaking $40,000
  • The Nasdaq jumped late in the session, ending the day up 3.7% while the Dow increased 1.55%

After much anticipation, the Fed finally announced a rate hike of 0.25% Wednesday. The increase was in line with expectations, but the market's initial reaction was negative. Fed Chair Jerome Powell's opening statement acknowledged inflation well above the target range, blaming supply chain constraints.

"Inflation remains well above our longer-run goal of 2 percent," Powell said. "Aggregate demand is
strong, and bottlenecks and supply constraints are limiting how quickly production can respond."

"We understand that high inflation imposes significant hardship, especially on those least able to meet the higher costs of essentials like food, housing and transportation."

Today's Federal Open Markets Committee (FOMC) meeting is the first of eight this year, Powell said, and the Fed plans to increase rates on a meeting-by-meeting basis.

While equities experienced a dip immediately following the rate hike, they later rallied, with the S&P 500 posting a 2.24% gain on the day. The Nasdaq jumped late in the session, ending the day up 3.7% while the Dow increased 1.55%.

[stock_market_widget type="accordion" template="chart" color="#5B35D5" assets="^GSPC,^IXIC,^DJI" start_expanded="true" display_currency_symbol="false" api="yf" chart_range="1mo" chart_interval="1d"]

Signaling that investors were divided on the rate change's potential impact on crypto markets, bitcoin had a bumpy day leading up to the rate hike, but it ended stock trading hours up 5.19%. Bitcoin has recently seen a series of higher lows and lower highs, suggesting a large volatile move up or down is on the horizon.

Aave, a decentralized finance platform that allows crypto lending and borrowing, was crypto’s biggest gainer of the day among the top 100 coins by market capitalization, with a 15.24% jump.

[stock_market_widget type="accordion" template="chart" color="#5B35D5" assets="BTC-USD,ETH-USD,AAVE-USD" start_expanded="true" display_currency_symbol="true" api="yf" chart_range="1mo" chart_interval="1d"]

Top stories

Story: New Digital Asset Manager Files for First ETFHire 600 New Employees

  • Digital Funds founder Michael Willis said he expects digital assets to “replace the financial legacy system”
  • The company plans to file for a spot bitcoin ETF and other crypto-focused products

Story: Fed Raises Interest Rates a Quarter Percentage Point

  • The central bank signaled seven more rate hikes this year
  • Inflation is not likely to decline until the middle of 2022, Powell said

Story: HSBC Buys Virtual Real Estate in Sandbox Metaverse

  • ”The metaverse is how people will experience Web3 [and] the next generation of the Internet,” HSBC’s Suresh Balaji said
  • Rival megabank JPMorgan unveiled a virtual lounge last month in blockchain-based world Decentraland

Story: The Y Combinator of Web3 Attracts Record Number of DAO Startups

  • “It looks like [the vast majority of] FAANG engineers and Web3 founders [want] to build in DAO tooling,” Alliance’s Qiao Wang told Blockworks
  • Ink Finance, specifically, facilitates mergers and acquisitions for DAOs

Going forward

The looming initial rate hike has finally passed, leaving investors sighing in relief that markets were largely up. But the conflict in Ukraine and its implications for broader geopolitics will continue to cause market uncertainty. Investors should assume volatility is a mainstay in the current market dynamic.


Don’t miss the next big story – join our free daily newsletter.

Follow Sam Bankman-Fried’s trial with the latest news from the courtroom

Tags

Upcoming Events

MON - WED, MARCH 18 - 20, 2024

Blockworks’ Digital Asset Summit (DAS) will take place March 18-20, 2024 at The Hilton London Metropole. Why London? Momentum.  London has become one of the world’s hottest crypto hubs.  Innovation is thriving, new institutional investors are flocking in, and regulators like […]

recent research

l1 cover.png

Research

This analysis focuses on financial metrics for general-purpose L1 blockchains. In many ways, L1s should be viewed as an entirely new asset class more comparable to digital economies than traditional businesses. L1s are the core infrastructure enabling the creation of new-age businesses like onchain protocols.

article-image

Polygon is transitioning to a validium-based system supported by zero-knowledge proofs

article-image

Indie filmmaker Sherone Rabinovitz has been gathering film of CryptoPunks’ founders and events for five years, and he just released the film’s trailer

article-image

The Cosmos MetaMask Snap is one of 36 Snaps currently in open beta

article-image

The ETF giant and crypto-native firm forged a partnership in 2021 before filing for a spot bitcoin ETF in June

article-image

Bloomberg Intelligence analysts expect ether futures ETFs by VanEck, Bitwise and ProShares to launch as soon as Monday

article-image

CommEX took over Binance’s operations in Russia this week after Binance left the country due to a mismatch with its compliance strategy