The FED, inflation and global adoption

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The FED, inflation and global adoption

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Cryptocurrencies have seen some wild swings over the course of the day and are now trading higher. Risky assets are reacting to the Fed’s decision to raise rates by 25 basis points, and growing global adoption could add weight to the push.

Related reading | Expectations of an aggressive FED drop, which is why Bitcoin could rise to $ 50,000

What excursions? Crypto reacts to the FED

The Federal Reserve just raised rates by 25 basis points, raising rates for the first time since 2018. Six more hikes are expected in 2022.

Markets experienced volatility following expectations for a more aggressive Fed, given the implications of the Russian-Ukrainian war, rising US inflation and rising Covid-19 cases. Over the course of the day, the cryptocurrency market first reacted to the downside, which experts described as a fake, then began to react to the upside.

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Total Cryptocurrency Market Cap at $ 1.7 Trillion in Daily Chart | Source: TradingView.com

Experts expressed during a Fox Bussiness Live that the FED is overdue and this move will not affect the economy. They added that the Fed is offering investors a simple field to do well in equities, “without worrying about the US economy.”

Likewise, the slight interest hikes look positive for bitcoin and consequently for other crypto assets as well.

President Jerome Powell said “the likelihood of a recession within the next year is not particularly high” and added: “All the signs indicate that this is a strong economy, which will be able to thrive, not to mention. resist, but certainly prosper, in the face of a less accommodative monetary policy ”.

As reported by NewsBTC, the 25 basis point hike scenario looks bullish for Bitcoin due to its more passive position.

As many believe the Fed’s dovish move comes as a belated reaction and will do little or nothing to US inflation, investors could take refuge in Bitcoin as it did before. Inflation is expected to remain high at 4.3% by the end of 2022, above the Fed’s annual target of 2.3%.

Keeping your savings in the bank only means a loss of purchasing power, and as a result, many people may begin to see Bitcoin as a hedge against these losses. Cameron Winklevoss, the co-founder of Gemini, argue that the best way to protect yourself from rising inflation is Bitcoin.

“Imagine paying a money manager 7.9% per year for doing absolutely nothing with your money. That’s what inflation is. It is a hidden handling fee that is not returned. Today, if you have USD cash, you are paying the US government 7.9% for doing nothing with your money. Alarming.”

Ukraine signs cryptocurrency regulation

In the midst of the Russian-Ukrainian war, cryptocurrencies also seemed the only viable option for people affected by the invasion and sanctions.

Ukraine benefited from crypto assets in several ways during the war. They received over $ 108 million in cryptocurrency donations, and citizens were reportedly able to use digital currencies as a tool to carry their funds safely while fleeing the country.

Additionally, regulatory clarity is expected for cryptocurrencies in the US and other places. Many politicians are taking a stand in favor of cryptocurrencies, and Ukrainian President Zelensky is not late.

Volodymyr Zelensky just signed a “virtual resources” law to legalize cryptocurrencies. An official statement states that this law “creates the conditions for the launch of a legal market for virtual resources in Ukraine”.

“The signing of this law by the President is another important step in bringing the cryptocurrency sector out of the shadows and launching a legal market for virtual assets in Ukraine.”

Deputy Minister of Digital Transformation, Alex Bornyakov, expressed who believe “that the cryptocurrency industry offers new economic opportunities. We will do our best to bring the bright new future closer as soon as possible.”

This does not mean that cryptocurrencies are legal tender in Ukraine, but holders of cryptocurrencies are now legally protected in the country. This favorable sentiment appears to be growing among many politicians and governments around the world, which could turn into a rapidly growing institutional adoption of cryptocurrencies.

As both Russians and Ukrainians found themselves in need of an alternative to traditional financial institutions, they also sought refuge in bitcoin and stablecoins.

In addition to the functional side experienced by the Ukrainians, the Russians could find in cryptocurrencies a refuge from their devalued ruble. This is a worldwide example and could end in a positive scenario for the market.

Related reading | Major news organizations in Ukraine aim to secure $ 1 million by selling NFTs

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