As inflation continues to dig into the pockets of consumers, the US Federal Reserve raised interest rates 75 basis points this month, increasing the benchmarked federal funds by around 1.5% and 1.75%. According to Fed Chairman Jerome Powell, this move was an “unusually large one” which caused panic among investors and resulted in a bear market for the S&P 500.
While US stocks soared, particularly technology stocks, cryptocurrencies continued to drop, with Bitcoin falling below $23,000 shortly after the Fed’s announcement. However, speculative holdings fared the worst; the AKF Innovation fund which holds stocks in highly speculative tech, fintech and biotech growth firms including Robinhood, Shopify, Unity, Block, Tesla, and Zoom fell by a whopping 60% from its previous 2021 high. Further, it is unlikely that cryptocurrencies and other speculative funds will find respite in the near future as the Fed intends to continue to raise rates by an additional 50-75 basis points come July.
- Feds Meeting Live Updates: Interest Rates Raised 0.75 Percentage Point, The Wall Street Journal
- Bitcoin USD, Yahoo Finance
- Will Rising Interest Rates Sink the Crypto Ecosystem?, CoinDesk