BTC’s recovery from under $18,500 on Monday, September 19, was swift but short-lived. After a 7-day high of $19,721.93 on Wednesday, September 21, it sank to an extreme low — $18,424.70 — the following day. Volatility wound down over the weekend, as BTC traded between $19,250 and $18,750.
The Crypto Fear and Greed Index barely moved (20-24) as fear of a global recession gripped the market. On Wednesday, September 21, crypto and equities sank on the news of yet another hawkish rate hike by the Fed. Due to an uptick in volume, BTC reversed course on Monday, September 26, despite traditional markets trading lower.
As of this writing, BTC is changing hands at $19,212.44, with a 24-hour gain of +1.7% and a 7-day fall of -1.1%.
Fed’s move hit ETH the hardest, as its crash from a peak of $1,388.23 on Wednesday, September 21, ceased at $1,238.84 the following morning. Through the weekend, ETH tagged after BTC in volume and direction and reclaimed the psychologically important $1,300 level.
ETH has been trading lower since the Merge on September 15. While most major cryptocurrencies posted losses on Friday, September 23, the coin led the way, shedding 4.21%. ETH is now 20% down since the upgrade, contrary to deflationary expectations. However, the Merge has squeezed ETH’s inflation — 5,400 new ETH is a significant drop from the 105,000 ETH that would have entered circulation otherwise.
As of now, ETH is trading at $1,330.48, with a 24-hour climb of +2.6% and a 7-day slip of -0.4%.
Unlike BTC and ETH, XRP was on a winning streak, climbing throughout the week with a gain of over 30% in total. Following $0.343444 on Monday, September 19, it peaked at $0.543612 on Friday, September 23, and repeatedly rose over $0.50 during the weekend.
Between September 16 and September 23, the token soared by 75% as investor interest rose on expectations of a favorable ruling in the SEC vs. Ripple lawsuit. Motions for summary judgment from both parties could expedite the case. Nevertheless, a pullback is still possible due to the overwhelmingly bearish sentiment.
As of now, XRP is trading at $0.474713, with a 24-hour loss of -5.4% and a 7-day rise of +31.8%.
Ripple CEO calls out SEC’s stance as XRP soars
Last week, XRP was on a roll as the legal battle between Ripple and the US Securities and Exchange Commission (SEC) heated up. On September 13, both parties filed motions for summary judgment to expedite the case. Amid anticipation of big rallies, Brad Garlinghouse addressed the SEC’s stance in a fireside chat with Messari CEO Ryan Selkis.
The regulator sued Ripple Labs, alleging it had issued XRP as an unregistered security. In mid-September, SEC Chairman Gary Gensler claimed that proof-of-stake cryptocurrencies, such as ether, could qualify as securities under the Howey Test, echoing the allegations in the lawsuit.
Ripple SEO noted a contradiction with a 2017 speech given by Bill Hinman, former Director of Corporate Finance at the SEC. “Bill Hinman, as the Director of Corporate Finance, got in front of the world and gave a speech saying, ‘We think ETH was a security and transitioned to a non-security because of a decentralization framework,’” he said.
According to Garlinghouse, the lawsuit and the SEC’s allegations against ETH demonstrate that the entity is “picking winners and losers” unfairly, which is not what a “capitalistic, democratic government” would do. “The coo-coo for cocoa puffs is, how in the world can they say, because it went from proof of work to proof of stake, now all of a sudden it went back to being a security?”
Ripple CEO also admitted that his personal portfolio includes BTC, ETH, XRP, and some other digital assets, and he is “long” on them. With XRP already up by 75% since September 15, further growth is still possible, depending on how the lawsuit plays out. According to DonAlt, the token could “giga moon” as “a lot of people will buy back in [...] If Bitcoin was looking solid into $21,000, was just chilling, I would just hold this to $1 if not $2 or $3.”
Fed raises interest rate yet again — is the worst behind BTC?
As expected, the Fed raised the federal funds rate by 75 basis points again on September 21 to pursue its objective of 2% inflation. With the rate target range between 3% and 3.25%, the borrowing costs shot up to their highest level since the Great Recession.
The widely anticipated move appeared to have been baked into the markets. Regardless, some anxious traders continued selling lower on September 21. BTC dropped sharply on the news, falling below $19,000 before picking up amid heightened volatility. The Dow Jones, the Nasdaq, and the S&P 500 tanked and posted their third straight daily decline the following day.
Central banks from the UK to Indonesia have been hiking interest rates to curb runaway inflation. The Fed has been especially hawkish as the US grapples with the highest inflation in four decades. This conditions investors to turn to "safer" assets, such as the US dollar, which has been climbing steadily. Meanwhile, crypto and equities are losing their luster.
Long-term investors could be less susceptible to this turmoil. As Edward Moya, OANDA senior market analyst for the Americas, explained, “It’s a wait and see approach: long-term investors are still committed to crypto, and they will be unfazed by today’s decision; they are anticipating that crypto will trade on its own fundamentals, eventually — not like tech stocks.”
Indeed, according to Arcane Research, the BTC has been mainly following tech stocks this year. It has also shed a lot of value — as of this writing, BTC is 72.4% below its all-time high of $69,045 seen in November 2021.
Glassnode co-founders Jan Happel and Yann Allemann note that the monetary tightening and regulatory pressure eclipse crypto fundamentals, accounting for increased risk paired with bearish momentum. Furthermore, rising volume amid a downward trend could foreshadow more pain for BTC holders. The executives expect BTC to remain in the $17,000-$25,0000 range.
How far is the Fed willing to go to stifle inflation? According to Adam Crisafulli, founder of Vital Knowledge, “the ceiling is much more important than the pace.” Previously forecasted at 3.4% by the end of 2022 and 3.8% by the end of 2023, the federal funds rate is now expected to hit 4.4% and 4.6%, respectively.
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