Friday, March 29, 2024

Fed hikes in March

by Hideo Nakamura
Fed hikes in March

Fed Hikes in March

The Federal Reserve (the Fed) is the central banking system of the United States. It sets a target for short-term interest rates that affect borrowing costs, consumer spending, and economic growth. In March 2021, it announced a decision to raise its benchmark rate by 0.25%, which marked only the second hike since 2008 when it began aggressively cutting rates during the financial crisis.

Impact on Cryptocurrency Markets
When news first broke out about an impending rate increase from the Fed in late 2020, some cryptocurrency investors saw this as a signal of renewed confidence in traditional markets and responded with selling pressure across digital asset classes such as Bitcoin and Ethereum due to concern over potential capital flow reversals into fiat currency assets like stocks or bonds instead of cryptocurrencies. This fear was further compounded when actual hikes were implemented beginning in mid-February 2021 through early April with some analysts noting that overall market sentiment had shifted away from riskier investments such as cryptos towards more stable store-of-values like gold or cash equivalents associated with higher yields provided by government debt instruments following these increases; however there are certain factors at play that could potentially offset any negative effects from rising U.S Treasury bond prices – namely increased demand for alternative currencies/tokens including those backed by commodities or other real world assets along with continued public sector support via stimulus packages aimed at stimulating economies worldwide throughout 2021 & beyond meaning crypto will likely remain attractive even if conventional investment markets experience volatility due to external macroeconomic events like changes in monetary policy decisions taken by major banks around world so while direct impact may be limited depending upon individual investor’s preferences one should not discount broader implications coming into play especially given uncertainty surrounding global economy post pandemic era where cryptos provide much needed liquidity benefits compared against their alternatives potentially allowing them stand strong amidst uncertain times ahead!

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