Will the crypto market get better? MEXC CEO Andrew Weiner says that in recent months, we have seen the failure of many large companies that caused BTC to fluctuate around $16,000 for several weeks. Although money continues to flow into the market it is clear that there is no sign of a return. A true recovery requires a combination of economic growth and industrial development.
Fed Chairman Jerome Powell at the eighth and final meeting of 2022 on Nov. 30 indicates that the Federal Reserve will raise interest rates another 50 basis points. The previous increase in food prices was 75 basis points.
Analysis of data from the Department of Labor in the United States shows that the unemployment rate is higher than the 3.5% that used to be without showing significant signs of problems before the pandemic. Andrew believes that millions of jobs have been lost on the eve of this pandemic.
Significant unemployment has continued due to the pandemic, a gap that does not appear to be closing completely anytime soon. Import prices for fuel and non-oil have fallen in recent months, according to indicators of prices paid by producers. Since the beginning of 2022, the price of the main product has fallen by almost three percent.
Adding further, Andrew said that there is a possibility of loss based on indicators and statistics. As a result, crypto market expectations for 50 basis points higher in December fell from 66% to 77%, reflecting its dovishness.
Bitcoin (BTC) jumped about 1% off the news to hit $16,982. On the other hand, US stocks rose, led by the Nasdaq Composite, which climbed up to 4% after Powell’s tone during the speech. As the head of the Fed said, other points showed strength and high. The S&P 500 was off more than 3%, while the Dow Jones Industrial Average rose 737 points. BTC was slightly removed from US stocks.
Federal Reserve and Crypto Market
The Federal Reserve’s interest rate hike had the least impact on the crypto market’s decline. The increase in interest rates of the Federal Reserve reduces the impact on the decrease in the cryptocurrency market value.
From January 25 to 26, 2022, it was noted that the Federal Reserve began to talk about interest rates. The main obstacle is the resolution of the economic crisis caused by the increase in the US dollar by 2020.
From the first increase of the first rate announced on March 26, it can be seen that the price of BTC has gradually increased, without affecting the rate increase. Continuing, Andrew also said that when he talks about stocks, surprisingly, looking at the history of the US stock market data, even with very low interest rates, the sale is going to face to do as we saw in 1950 and again since 2004.
Recessions followed by rate hikes. During rate hikes, on average, the S&P 500’s correction is nearly 15%. On the other hand, during a recession (even if it coincides with a cycle of rising rates), the average fall in equities is almost double (blue circle on the bar). If we see economic instability usually caused by inflation. US equities are more likely to fall after quantitative easing (QE) as the market feels that the Fed has begun to withdraw money due to a weak economy.
Andrew’s point is that we will now have to worry about recession after the numbers. Could bitcoin get out of the US equity market and out of the independent crypto market, because of the relationship between bitcoin and the big economy?
Another important thing you will see is the building of stablecoin. The cryptocurrency market has been stagnant for a few weeks and is still volatile. Although there has been a slight uptick in daily behavior, overall sentiment is still bearish. For a market reversal signal, it must see an increase in the crypto market share of stablecoins, which indicates that new money is entering the market.
According to data from DefilIama, the total stablecoin market capitalization is almost 140 billion, only half of its high, and a low. Right now, we can’t see any sign of the financial signal needed for the market reversal. An indicator used to predict sales is TVL. Total TVL sales are around 42 billion, according to DefiLlama.
Weekly TVL growth is 1.5%; In contrast, last week it increased by $ 0.63 billion. Ethereum TVL rose 3.72% between them, and after three weeks, Solana jumped 6.97% for the week but only contributed 0.72% to TVL. The public channel of Layer2 Arbitrum went up 2.25%, Polygon went up 0.94%, and the high water level was 3.18%, but BSC and Optimism went down 4.02% and 1.16%, respectively, last week. In plain terms, TVL says that there is no market capitalization yet and there are no signs of operations.