The cryptocurrency market has suffered in recent months, despite a strong rebound earlier this year. This downturn was exacerbated last week following the Federal Reserve‘s decision to maintain its policy interest rates at the 5.25%-5.5% range. Although this should have boosted the cryptocurrency market, investor sentiments were negatively impacted.
Concerns grew following a statement from Fed Chair Jerome Powell, who indicated that an additional quarter percentage point interest rate hike is necessary this year due to persistently high inflation. Powell also reduced the forecast for interest rate cuts from four to two in 2024, implying that higher interest rates will persist longer than previously expected.
The Federal Reserve’s hawkish stance led to multi-year highs in treasury yields, with the yield on the short-term 2-Year U.S. Treasury Note reaching its highest level since 2006. Additionally, the benchmark 10-year U.S. Treasury yield reached its highest level since 2007.
This increase in market interest rates negatively impacts high-growth sectors, including technology, consumer discretionary, and cryptocurrency. Last year, the cryptocurrency sector was significantly affected by the Federal Reserve’s stringent interest rate increase approach.
Major cryptocurrencies like Bitcoin, Ethereum, Cardano, Dogecoin, and BNB saw their prices drop following the rise in yields on sovereign bonds. The article also highlights several companies to watch in this context, including Robinhood Markets, NVIDIA Corporation, Visa Inc., and Coinbase Global.
Robinhood Markets operates a financial services platform that allows users to invest in various assets, including cryptocurrencies. NVIDIA Corporation, a major player in the semiconductor industry, tends to benefit from a thriving crypto market due to the crucial role of graphic processing units (GPUs) in the mining or production of cryptocurrencies. Visa Inc. is modernizing cross-border money movement by expanding its stablecoin settlement capabilities to the high-performing Solana blockchain. Lastly, Coinbase Global offers financial infrastructure and technology to support the global cryptocurrency economy.
In the light of the Federal Reserve’s decision to maintain high interest rates and the resulting increase in the treasury yields, the cryptocurrency market has experienced a significant downturn. This has been particularly impactful for high-growth sectors, including the cryptocurrency market. Major cryptocurrencies have seen price drops, and companies like Robinhood Markets, NVIDIA Corporation, Visa Inc., and Coinbase Global, which are heavily involved in the cryptocurrency market, are key ones to watch in this context.