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Breaking News: Crypto Bulls Rejoice: Congresswoman Confirms Powell’s Imminent Firing
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Breaking News: Crypto Bulls Rejoice: Congresswoman Confirms Powell’s Imminent Firing

Why It Could Be Disastrous For Crypto If The Fed Raises Interest Rates By 50 BPS

Dalmas Ngetich
Dalmas Ngetich
2 years ago
3 mins read
Crypto FED Interest Rates

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The crypto and legacy markets could see a spike in volatility in a few hours. Jeremy Siegel, the Wharton School of Business Professor, told CNBC’s ‘Closing Bell: Overtime’ that “it will be a disaster” if the United States Federal Reserve (FED) increases rates by 50 basis points on February 1, 2023.

FED Have To Increase Interest Rates By 0.25%

The Professor insisted that if the FED mentions any figure “that’s not 25 basis points” during today’s meeting, the effects would be far-reaching.

Besides changes in interest rates, Jeremy wants to see the FED change its statement’s wording and expressly mention that their monetary policy decisions over the past months have been working. He adds that it would be refreshing for the FED to assure the market that they are near the end of their tightening cycle.

Crypto and legacy market participants expect the United States central bank to slow down on rate hikes in the coming months. However, traders’ and investors’ hope could be dashed if policymakers assess market conditions differently and see the need to keep rates high. 

Economists expect the FED to increase interest rates by 25 basis points to 4.75%, up from 4.50%, on February 1, 2023. The bank began raising interest rates in January 2022. Over the months, the prevailing interest rate in the United States has risen from 0.25% in January 2022 to 4.50% by the close of 2022.

Falling Inflation, Rising Crypto, And Bitcoin Prices

Inflation is among the many factors, including labor conditions, which the FED considers when determining interest rates. The effects of the COVID-19 pandemic and the need for the government to intervene and cushion its citizens saw governments slash rates to record levels.

According to Jeremy, inflation was inevitable with “money being poured on and on, “and it did sharply in 2021 and 2022. Recent readings show that the Consumer Price Index (CPI), a metric tracking price pressures on consumer goods and a proxy to gauge inflation, has been slowing down after rising to multi-year highs. 

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In December, inflation dropped to 6.5%, making it the sixth consecutive month of falling consumer prices. It peaked at 9.1% in June 2022 before falling to 6.5% in December, 1% less than in January 2022, when inflation stood at 7.5%. 

Bitcoin prices briefly recovered in December 2022, bottoming up after losing over 60% in 13 months from November 2021, in reaction to changing macroeconomic conditions, mainly inflation. 

Bitcoin Price on January 31
Bitcoin Price on January 31| Source: BTCUSDT on Binance, Tradingview

Over the past weeks, Bitcoin prices have been tracking higher as the crypto market expects inflation to cool down and the FED to slow down on tightening in 2023.

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Bitcoin Price Retreats After Fed Decision But 100 SMA Is The Key

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For this reason, how the FED acts could shape the short-term price formation for Bitcoin. The coin sharply recoiled from around $24,000 on January 30 but steadied yesterday.

Feature image from Canva, Chart from TradingView.
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Dalmas Ngetich
Dalmas Ngetich

Dalmas Ngetich

Dalmas, a seasoned crypto reporter, brings a unique perspective to the industry. His specialization in NFTs, blockchain, DeFi, and blockchain news for NewsBTC, combined with a background in mechanical engineering and over a decade of experience in journalism, has allowed him to craft over 10,000 news and feature articles over the past eight years. His diverse range of topics, including technology, Forex, and finance, reflects his comprehensive understanding of the crypto landscape.

Read more

His technical expertise and analytical skills have been recognized and featured by leading news outlets such as Investing.com, CoinTelegraph, Entrepreneur, Forbes, and other authority sites. Notably, he broke key news, including the Ripple and MoneyGram partnership, cementing his position as a thought leader in crypto.
The news exploded. Over 100,000 people devoured this meticulously crafted report, from seasoned investors to curious newcomers. His analysis wasn't just dry facts and figures; it crackled with insight, dissecting the implications of the partnership and its potential impact on the future of finance.

His deep understanding of the financial markets, technological advancements, and blockchain developments has made him a respected voice in the industry.

Dalmas is also the founder of BTC-Pulse, a crypto news site, further demonstrating his commitment to the field. He firmly believes that DeFi and NFTs are here to stay and will continue to drive financial inclusion.

Coming from Nairobi, Kenya, it is easy to see the source of his inspiration: Across Africa, millions lack access to traditional banks. Remote villages, limited documentation, and high minimum balances create insurmountable barriers.

DeFi, not just Maker or Aave, for example, but think of Bitcoin and USDT, cuts out the middleman. Forget banks with their limitations.
Even so, DeFi isn't a magic solution. The continent still struggles with reliable internet access, and educational campaigns highlighting the benefits of this wonderful solution are insufficient. Moreover, even for those interested, understanding DeFi can look like learning a new language.

Dalmas is here to help make the tech easy to understand and digestible, even for beginners.
The story of DeFi in Africa is still being written. Challenges abound, but the promise of a more inclusive financial future is a powerful motivator. With innovation and collaboration, Dalmas firmly believes that DeFi could become the key to unlocking Africa's full economic potential.
This possibility and its immense value motivate Dalmas to continue breaking key DeFi innovations and more across the globe. His engineering background further enhances his ability to deliver well-thought-out pieces that blend technical insight with clear, impactful reporting.

Beyond his professional achievements, Dalmas is deeply passionate about technology and politics. Policies drive adoption, and being at the forefront and keeping up with how they evolve is crucial for the sphere to mature.

When Dalmas is not closely monitoring the latest crypto events, he can be found in nature, exploring the picturesque countryside, and traveling with his family and friends. His love for adventure and discovery perfectly complements his investigative and reporting skills.
You can connect with Dalmas on X: @Dalmas_Ngetich, or contact him on Telegram @Dalmas_Ngetich.

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Disclaimer: The information found on NewsBTC is for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.

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Reason to trust

Strict editorial policy that focuses on accuracy, relevance, and impartiality
Created by industry experts and meticulously reviewed
The highest standards in reporting and publishing
How Our News is Made

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