Cryptocurrencies have been showing some signs of recovery over the last week, with the total crypto market capitalization climbing above the $1 trillion mark. Bitcoin (BTC) has held above the $20,000 significant support level for the past seven days, rising 6.57% over the same timeframe. Ethereum (ETH) is back above $1,500, and Binance coin (BNB) has reclaimed $300, recording 18% and 19.67% gains over the past seven days, respectively, according to data from CoinMarkeCap.
Contrastingly, Big Tech stocks have been mostly bearish following subpar Q3/2022 earnings. Shares of Big Tech companies, except Apple, reported tepid earnings for the third quarter of the year. These results disappointed investors last week who saw a meltdown in stock prices of Amazon, Alphabet, Meta Platforms, and Amazon, which lost $350 billion of their market value last week.
In contrast, Apple exploded on Friday, recording its best day since 2020. Billionaire Warren Buffet increased his Apple stock holding in early 2022, and the bet appears to be paying off.
Market participants now look forward to the November FOMC meeting scheduled for Wednesday this week. The Fed’s decision on interest rate hikes can dictate the direction crypto prices may take in the near term. In addition to other macroeconomic data, this will form the backdrop to overall market sentiment beyond crypto.
Powell’s Speech To Impact Crypto Prices
The much-awaited event this week is the Federal Open Market Committee (FOMC) which is scheduled for November 1 and 2. During this meeting, the Fed officials are expected to decide on the base interest rate hike for November, which has been overwhelmingly priced in at 75 basis points.
If this happens, it will match the Fed’s previous interest rate hikes in September and July. The crypto market will, however, be watching to see if the U.S. Federal Reserve will change its quantitative tightening measures (QT).
The Fed has taken a primarily hawkish stance in 2022 to curb inflation. After the September FOMC meeting, Fed chair Jerome Powell said,
“Restoring price stability will likely require maintaining a restrictive policy stance for some time. The historical record cautions strongly against prematurely loosening policy.”
If Powell says that the Fed was okay with monetary loosening following last week’s hints of dovishness from some FOMC members, the recovery displayed by crypto prices over the past seven days may continue.
Apart from the rate hikes, market participants are waiting for Powell’s commentary on future interest rate hikes. The U.S. economy is slowing down, and the outlook for 2023 doesn’t look appealing. Even the central bank expects the country’s unemployment rates to rise from the current levels. Any future rate hikes by the Fed would only add to the ailing economy.
The Fed chair said that further interest rate increases might lead to a recession on several occasions. However, he clarified that the Federal Reserve was not trying to force a recession. While recession impacts most sectors of the economy, some investments are largely recession-proof.
This could ultimately provide severe fuel for growth as conditions loosen for Bitcoin and other cryptocurrencies. However, some market analysts expect a standard recitation of the announcement coming from this week’s FOMC meeting.
This will be the second last FOMC meeting for the year 2022. The Fed has so far raised interest rates by 300 basis points, including three straight rate hikes of 75 basis points.