After the Fed frightened the cryptocurrency market, Ethereum plummeted by 13%, more than Bitcoin

Ethereum’s native token Ether (Ethereum), the Fed fell sharply a few hours later Publish meeting minutes The results of its December meeting showed that it focused on a faster timetable for interest rate hikes in 2022.

The minutes of the meeting show that the Federal Open Market Committee (FOMC) supports raising short-term interest rates “faster or faster than participants had previously expected.”According to CME Group, trading in the interest rate futures market show The probability of an increase in March for the first time is two-thirds.

After the meeting minutes were released, Ether fell, falling by more than 13.50% to $3,300. Its plunge reflects a similar downward trend in the entire crypto market, Bitcoin (Bitcoin) Fell slightly more than 9% to nearly $42,100.

It is indisputable that ETH/USD caused more losses to investors than BTC/USD After the Fed’s announcement.

Traders seem to have decided to remove tokens whose long-term profits are higher than Bitcoin. For example, Ether returns In the past 12 months-even after the Fed-led interest rate cut-the result has been around 175%. On the other hand, Bitcoin’s profit during the same period was close to 15.75%.

Similarly, Ether’s number one opponent Solana (Sol), also recorded more losses than Bitcoin, which fell by more than 13.75% after the Fed’s news. Despite this, its 12-month profit is still more than 7,500%, which shows that if the cryptocurrency market’s bias is still biased towards bears, it indicates a further extreme correction.

ETH/BTC reached a key rebound level

Ether Plunge against Bitcoin, Based on the performance of instruments widely traded in ETH/BTC in the past 24 hours.

The currency pair fell by more than 5%, reaching 0.077 BTC. In doing so, it also reached a key support level close to 0.078 BTC, and recently passed the limit of the former’s downside bias, which helped to keep Ether’s bullish against Bitcoin.

At the same time, the 0.078-BTC support level seems to be the downtrend line of the Ether’s descending triangle. The descending triangle is a continuous pattern that usually pushes the price in the direction of the previous trend after the consolidation period.

In the long run, this increases the potential for Ethereum to remain stronger than Bitcoin, as long as it breaks the upper trend line of the triangle with a convincingly higher trading volume.

Too early to worry about the Fed

For months, Fed officials have insisted that the inspiration for rising U.S. inflation comes from supply chain bottlenecks, and Chairman Jerome Powell has asserted that this will resolve itself. But at the most recent meeting, he was concerned about the so-called “Inflation is temporary“Narrative.

This is mainly because of the U.S. Consumer Price Index Set a new high in nearly 40 years In November 2021, it increased by 6.8% year-on-year. At the same time, core consumer prices excluding energy and food categories rose to 4.7% year-on-year; it was higher than the Fed’s preferred 2% inflation target.

“I think there is a real risk now that inflation may be more persistent, and… the risk of rising inflation has become entrenched,” Say Powell concluded the FOMC meeting on December 15.

Madison Faller, Global Strategist, JPMorgan Chase Private Bank Tell Bloomberg believes that investors should not be afraid of the Fed, and pointed out that its three interest rate cuts in 2022 will do little to curb consumer prices. she says:

“Growth and inflation will decelerate throughout 2022, but still above historical trend levels. We believe this will greatly reduce the risk of major market adjustments triggered by the Federal Reserve.”

As Cointelegraph also reported, concerns about rising inflation, in turn, tend to depreciate cash, prompting mainstream investors Put money in the cryptocurrency field.

For example, Thomas Peterffy, the billionaire founder of the brokerage firm Interactive Brokers Group Inc., admitted that he used 2% to 3% of his net assets in cryptocurrency to prevent legal currency from “going to hell.” Similarly, Ray Dalio, the founder of Bridgewater Associates, revealed last year, His portfolio contains Bitcoin.

The inflation outlook is expected to provide some breathing room for Ether, which tends to Track Bitcoin’s price movements.

At the same time, Fundstrat Global strategists Sean Farrell and Will McEvoy pointed out that investors should increase their global investment. Smart Contract Department Get the most benefit from the next market rebound.

They stated in a report: “Given the current macro background, the leverage of the Bitcoin market, and the recent strong performance of the altcoin market, we believe it is appropriate to increase our holdings of Ethereum and other smart contract platforms.” Add to:

“We may not bet on Bitcoin in the short term, but we think there is an opportunity for long-term volatility through derivatives strategies.”

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