Post-Fed Crypto Rally: Dazzles, Then Fizzles

The crypto market rally, post the Fed’s 75-basis points rate hike on Wednesday lost steam amidst a massive slump in equity markets worldwide, triggered by the surprise decision of the Swiss National Bank to raise rates by 50 basis points. Subsequently, the Bank of England also raised rates by 25 basis points as expected. Data from coinmarketcap.com shows crypto market capitalization surging to a high of $976 billion, from the 24-hour low of $830 billion. It is currently at $912 billion, versus $910 billion 24 hours ago.

The crypto markets had scaled its peak market cap of close to $3 trillion in early November of 2021. But the then-high inflation reading of 6.2 percent for the 12 months ended October flipped sentiment and sent markets crashing. Since then, inflation increased steadily to climb to 8.6 percent by the end of May 2022. In response, the Fed, for the first time since December 2018, increased rates by 25 basis points in March, 50 basis points in May and 75 basis points in June of 2022.

In the Summary of Economic Projections issued on Wednesday, the Fed has increased the inflation forecast for 2022 to 5.2 percent, from the 4.3 percent projected in March. The growth forecast has been lowered to 1.7 percent from 2.8 percent earlier. The unemployment has been forecast to rise to 3.7 percent from 3.5 percent projected in March. The median year-end projection for the federal funds rate has moved up to 3.4 percent from 1.9 percent earlier.

The Fed chair also indicated that the next hike could be 50 or 75 basis points, depending on the macroeconomic data and evolving outlook on the economy. The next inflation reading, for the month of June is due on July 13, whereas the next FOMC is scheduled for July, 27.

In this macroeconomic backdrop, crypto market capitalization is hovering near $912 billion, up less than half a percent on an overnight basis.

Bitcoin is currently trading at $21,260.44, 0.60 percent lower on an overnight basis. Bitcoin dominance is at 44.4 percent.

Ethereum edged up 0.2 percent to trade at $1125.98. Ethereum’s dominance dropped to 14.9 percent.

3rd ranked Tether (USDT) traded between $0.9991 and $0.9984 in the past 24 hours. The USDT market cap however dropped to $70 billion, versus $70.8 billion on Wednesday and $71.5 billion on Tuesday.

4th ranked USDCoin (USDC) traded between $1.00 and $0.9998 in the same period. USDC market cap is at $54.5 billion versus $54.3 billion on Wednesday and $54.1 billion on Tuesday.

5th ranked BNB gained more than 1.5 percent overnight.

6th ranked BinanceUSD (BUSD) traded between $1.00 and $0.9992 in the past 24 hours.

7th ranked Cardano ADA gained more than 3 percent overnight whereas 8th ranked XRP(XRP) added more than 2 percent.

9th ranked Solana (SOL) rallied more than 8 percent whereas 10th ranked Dogecoin (DOGE) surged 5 percent.

26th ranked Bitcoin Cash (BCH) and 28th ranked Monero (XMR) slumped more than 4 percent.

A big-picture view of the overall crypto market shows Bitcoin dominating 44.4 percent of the market. The Smart Contracts category led by Ethereum (ETH) is currently commanding 23.6 percent of the market. Stablecoins led by Tether (USDT), USDCoin (USDC), Binance USD (BUSD) etc. occupy 17.22 percent of the overall crypto market.

Cryptocurrencies of Centralized Exchanges add up to 5.54 percent. BNB(BNB), UNUS SED LEO (LEO), FTX Token (FTT) and Cronos (CRO) are the toppers in this category. The DeFi category led by Dai (DAI), Wrapped Bitcoin (WBTC), Avalanche (AVAX) etc., command 5.07 percent of the market.

Among the remaining categories, Web 3 sums up to 2.25 percent; Research grosses 2.17 percent; NFTs account for 1.74 percent; Memes command 1.37 percent; Decentralized Exchanges amount to 1.17 percent; Metaverse commands 1.08 percent; DAO sums up to 1.06 percent; Governance grosses 1.05 percent; while Gaming follows with 0.96 percent market capitalization.