BateX Talk: In 2022, when the Federal Reserve starts raising interest rates, how will it affect the crypto market
At 20:30 on the evening of October 13, the United States will announce the annual rate of seasonally adjusted CPI at the end of September, which will be another worry for investors. JPMorgan’s trading department warned that if the U.S. CPI released on Thursday was too high, it could send U.S. stocks down 5% in a day. Investors are worried: Even if this month’s CPI is in line with expectations, this month’s OPEC+ oil production cut has made investors completely desperate for the October CPI index. Bank of America expects the Fed to raise interest rates by 75 basis points for the fourth time in November, with even more room to hike.
U.S. stock investors suffer huge losses
On October 10, a well-known Wall Street figure and ARK investment management company Cathie Wood (known as Sister Wood) published an open letter to the Federal Reserve. In the open letter, Wood said the Fed’s hawkish stance on inflation may be wrong. Cathie Wood’s fund has suffered dismal performance as it enters the rate hike cycle, with its flagship fund down 56% in the first eight months of 2022, more than double the Nasdaq 100’s 25% drop over the same period.
Not only are American institutions very uncomfortable, but even optimistic retail investors are giving up. About $89 billion flowed into money-market funds last week, the most since April 2020, according to the latest Goldman Sachs data on inflows from stocks into money-market funds. This could be a signal that U.S. stock investors are about to capitulate, and don’t underestimate the liquidity impact of retail investor sell-offs in U.S. stocks.
Continued U.S. interest rate hikes spark complaints
Many countries around the world are feeling the pain in this round of interest rate hike cycle. The European Union’s high representative for foreign affairs and security policy said the Federal Reserve is leading the world’s central banks to raise interest rates, which may push the world into recession. IMF President Georgieva and World Bank President Malpass also warned on Monday that the risk of a global recession is rising as a slowdown in advanced economies and accelerating inflation force the Federal Reserve to continue raising interest rates, increasing the risk of a global recession. Debt stress in developing countries. A new report from the World Conference on Trade and Development (UNCTAD) says that if interest rates continue to rise, the resulting global recession could be worse than the global financial crisis of 2007-2009 and could lead to a global debt crisis.
More and more investors flee to join the crypto market for better investment opportunities
Expectations of a Fed rate hike will start a risk aversion across the market. This will not only make a large number of investors cautious, but even exit the market, which will cause them to join the crypto market in search of better opportunities. Assets with large value consensus, such as Bitcoin, ETH and some projects with real ecology and application, may attract most of the funds in the crypto market, thus maintaining relative strength, and even taking advantage of the gap between interest rate hikes to rise. After the Fed raises interest rates and even begins to shrink its balance sheet, the global capital will return at an accelerated rate, and the crypto market will form a small and beautiful self-circulation with its rapid development speed and sufficient quality.
The survival of the fittest in the market is ruthless. Only those who can withstand the impact of the market and pass through the bull and bear projects are qualified to survive and usher in a brilliant future. From this perspective, the reshuffle of the crypto market caused by the Fed’s current rate hike cycle may be an opportunity for investors to let us know which projects are truly valuable. After all, we will know who is swimming naked until the tide goes out .
During the pandemic, the crypto market grew rapidly and looked booming. The world is now facing “big changes unseen in a century”, whether it is the profound adjustment of the current international structure and international system, the profound changes in the global governance system, or the exhaustion of “old” technology dividends and the gradual germination of new technologies, the world The contradictions caused by the slowdown of the overall stagflation of the economy will gradually emerge in the future.
If you are an investor who is currently suffering losses, Batex recommends that you take the following measures:
1. Change the investment target. After a loss in investment, if investors find that the investment varieties in their hands are poor, the trading volume is low, and there is no motivation to rebound. At this time, investors can choose to sell and buy some active and popular investment products.
2. Continue to make up positions. After a loss occurs, if the target is still in the falling channel, the investor’s loss will gradually expand. At this time, investors can appropriately cover their positions and spread their holding costs.
3. Wait patiently. If the investor’s daily life is guaranteed, but there is no excess funds to increase the position. Then, in this case, users can choose to continue to hold and wait for the next bull market to break out.
The crypto market is a boat in the sea, and we, as water droplets falling on this boat, open our arms with Batex to embrace changes, embrace storms, and usher in a bright future.