The Federal Reserve has raised rates by a half percentage point, with Chairman Jerome Powell stating that they will move expeditiously to combat rising inflation and taper their balance sheet more quickly than expected. While some investors are excited by the news, there is concern that the Fed may continue to hike rates beyond this initial increase. Despite this, the market is pumping on the news, with altcoins such as Cardano and AVAX seeing significant gains. The content also includes a mention of sponsor KuCoin and their low fees for trading cryptocurrency. The speaker suggests continuing dollar-cost averaging and investing in undervalued assets.
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Understanding the Fed’s Market Pump: Breaking Down Jerome Powell’s Statement
Introduction
How’s it going everyone? It’s Sam, and today we are going to discuss the Federal Reserve’s (Fed) impact on the current market.
The Fed Meeting
The Fed has raised the rates by 0.5% – the biggest rate hike in two decades – which was expected by almost 99.3% of the people polled. Jerome Powell, Chairman of the Federal Reserve, announced that the Fed is moving “expeditiously” to combat the rising inflation. This move was also expected by the market as the Fed is set to sell off its balance sheets quicker than previously anticipated. Although it was slightly worse than expectation, the market remained steady.
Good News for the Market
Investors started becoming excited as Powell began his statement. First, he mentioned that the Fed may initiate multiple 50 basis point hikes, which was not unexpected, considering the current market conditions. However, the critical point that made investors ecstatic was that the Fed would not be doing a 50 or 75 basis point hike. This was huge news because investors were worried that the Fed’s statements would differ from their actions, causing a much faster rise in rates than anticipated. The Fed is between a rock and a hard place, having to raise the rates to combat inflation while avoiding a massive recession.
Pumping of the Market
The market reacted positively to this news, and Bitcoin is currently at $40,000, while multiple indexes are up by 2% or more. This rise in the market signifies that investor fear of being rug-pulled is over, as the Fed has been transparent, explaining its actions and sticking with them. Investors feel like they are on the same page as the Fed, and this confirms their beliefs. The rise in the market has also increased the bullish sentiment towards cryptos like Cardano, which is up 11%. Additionally, cryptocurrencies like AvaX and Tron are also up by 10% and 12%, respectively.
What to do Next in the Market
The key to success in the market is to stay invested and buy assets that are undervalued. This means dca-ing (Dollar-Cost Averaging) into cryptos and stocks over the long term, regardless of the Fed’s actions. Although timing the market is beneficial, it can also be dangerous, and buying assets when they are undervalued and holding on to it could bring more profits in the long run. Therefore, it is essential to stick to top cryptos like Ethereum and Bitcoin, also seeing some extra volume in Twitter comments.
Conclusion
The Fed’s move to combat rising inflation has caused the market to increase significantly, with investors feeling comfortable and realizing the importance of their transparency. It is essential to continue dca-ing and buying undervalued assets to gain long term profits.
