On the 2nd of November, Bitcoin and the crypto market continued to trade correlated with risk. According to data from CoinGecko, Bitcoin, the largest cryptocurrency, is trading at $20,414 and is 0.2% up as of this writing. While Ethereum, the second largest cryptocurrency, is trading at around $1,579 and is 0.6% up. The Federal Reserve’s interest rate decision is on tomorrow, which will also affect the broader crypto market.
On the other hand, the US stocks had a difficult day of trading, as all the Wall Street’s major indexes dropped due to news that the labor market was strong. This data could lead the Federal Reserve to increase interest rates. It is expected that the Fed will raise interest rates, as in low unemployment, people spend more, which increases prices.
But Chinese stocks listed in the US had a spectacular day of trading due to social media posts. In posts, it is claimed that China’s government may ease its strict COVID-19 lockdowns.
The Fed has been trying to get inflation under control because it’s at a four-decade high. It’s not only in the US, where the interest rates have been increasing, but it is happening worldwide. Several worldwide Central Banks have been raising interest rates to control soaring prices. Because of these reasons, many investors avoid investing in risky assets, such as equities and Bitcoin.
Bitcoin and the other crypto market has been correlated with the US stocks. But recently, Bitcoin has proven to be more resilient to more significant macroeconomic trends, which raised questions about whether it has decoupled from equities.
However, the Federal Reserve will announce its latest interest decision tomorrow. The new decision is expected to slow down the aggressive monetary policy it’s used this year to tame inflation. But if we look at today’s figures, the expectations may be misplaced.
Darius Sit, a person from Singapore-based crypto investment firm QCP Capital, told Decrypt that they are concerned about a negative market reaction to persistent hawkishness from the Fed, with markets shifting expectations toward a dovish outcome at the upcoming meeting.