Why is the Crypto Market pumping?
Are we out of the Bear Market?
Source pexel
The crypto market reacted positively to bad news few hours ago and the reason is bizzare.
The United states announced a 0.75% interest rate hike.This means higher interest cost for everything, from student loans to business loans, family loans, mortgages, you name it.
The idea is to curb inflation. It is meant to reduce borrowing and spending,lower demand and therefore slow down in increase in price of goods and services in the economy.
What does this mean for crypto?
Source pexel
The anouncement of this new interest rate breeds concerns about an impending recession which affects the economy at large.
This announcement ought to send assets and investments considered risky to the bottom rocks.
But instead, Bitcoin which is considered a risky asset went up in price.
Why??
Here are my thoughts on it. There are two possible reasons:
The first reason being that People do not believe the interest hike will curb inflation. Most believe inflation has been a problem for over the past year and it's only going to get worse and they would rather protect their asset in crypto.
Secondly, the crypto-oriented population is hoping for a repeat in history, where a global economy crisis due to covid-19 pandemic sent the price of bitcoin to amazing new daily highs. No one wants to miss out of that twice, nahh.
So, what's next. Is this pump for real?
Created
I guess you are wondering, will the crypto market pump from here or is this a bull trap?
Some credible crypto men and women believe the pump is fake and will crash back. I think so too.
However, even if its just a relief pump, it's healthy to see the cryptocurrency take a break from the bearish market. Keep in mind that it might be safer to simply buy and sell than hodl for long as there is a huge chance that this is unlikely the begining of a long bullish ride.
But then, I guess we all just have to wait and see.
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