← Go back Sep 09, 2023
The cryptocurrency market experienced a blow on September 21, following a statement from Chairman Jerome Powell after the September FOMC meeting. Despite the Fed keeping the benchmark lending rate unchanged at 5.25-5.5%, the statement dampened market sentiments. The current dot-plot reveals a strong likelihood of another 25 basis points hike in 2023, resulting in a terminal interest rate of 5.6%, significantly higher than the 5.1% forecast in June. This would be the highest level since March 2001. The central bank also announced its plan to maintain higher interest rates for a longer period. The new projection shows a maximum of two rate cuts in 2024 rather than the four projected in June, with the first cut not expected before September 2024. This led to the short-term 2-Year U.S. Treasury Note yield reaching its highest level since 2006, with the benchmark 10-Year U.S. Treasury Note yield at its highest since 2007. High market interest rates are detrimental to high-growth sectors, including , consumer discretionary, and cryptocurrency. The crypto space was particularly affected last year due to the Fed’s rigorous interest rate hike regime. Major cryptocurrencies such as Bitcoin, Ethereum, Cardano, Dogecoin, and BNB saw price drops of 1.7%, 1.9%, 1.9%, 2.3% and 1.6%, respectively on September 21. Companies such as Robinhood Markets Inc., Coinbase Global Inc., Block Inc., Visa Inc., and PayPal Holdings Inc., which offer various cryptocurrency services, continue to operate amidst these challenges. Their projected earnings growth rates for the current year vary from 15.3% (Visa Inc.) to 84.8% (Coinbase Global Inc.). Robinhood Markets Inc. operates a financial services platform allowing users to invest in cryptocurrencies, among other assets. Coinbase Global Inc. provides financial infrastructure for the crypto . Block Inc. owns the digital and mobile payment platform Square and Cash App, which allows Bitcoin transactions. Visa Inc. is expanding its stablecoin settlement capabilities, while PayPal Holdings Inc. offers digital wallets and cryptocurrency transactions. Despite the Federal Reserve’s decisions and their impacts on the market, these companies continue to invest and innovate in the crypto space, demonstrating a strong belief in the potential and resilience of this emerging market.
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