- BTC slid to $26,500 as interest rates, U.S. dollar surged and equities declined.
- Fed’s “higher for longer” stance puts pressure on crypto firms, Oanda’s Edward Moya said.
- Equity sell-off could drag BTC price lower, per QCP Capital.
Cryptocurrency markets slid lower on Thursday as investors digested the repercussions of Federal Reserve Chair Jerome Powell’s hawkish remarks about keeping financial conditions tight and interest rates high for longer.
Equity sell-off could drag BTC price lower
The Fed projected one more rate hike for this year and less cuts for next year, which stirred up traditional markets.
U.S. equity markets sold off as a result, with the broad-market index S&P 500 losing 1.6% and the tech-heavy Nasdaq Composite Index plunging 1.8%.
Strain on the equity market due to the strict Fed policy could drag on crypto prices, according to digital asset trading firm QCP Capital.
“U.S. equity and rates markets have broken some very key levels on the back of this, and reflexivity can take over with the bearish thesis from here,” the QCP wrote in a Telegram market update. “This macro move could seep into crypto markets and take BTC lower with it, albeit with a lower beta as compared to other very stretched macro markets like the Nasdaq.”
High rates pressure crypto firms
Higher rates will also put pressure on embattled digital asset firms, jacking up their refinancing costs, per Edward Moya, senior market analyst at online brokerage platform Oanda.
“Borrowing costs will remain elevated and refinancing will be a nightmare for crypto firms,” he said in an interview with CoinDesk TV.
“Crypto not only needs rates to peak, but for rate cut bets to grow,” Moya added. “The Fed still believes the soft landing will happen, but a few more stickier inflation reports and that will make those 2024 rate cut bets disappear.”
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