How will the Fed’s raising the base rate affect the crypto market?

The head of Polygon, Sandeep Nailwal, expressed the opinion that Web3 continues to develop actively, despite the bearish crypto market. This is due to innovation in this area.

Nailwal sees the relationship of the current correction with “macroeconomics” rather than with some fundamental problems in Web3. He insists that the growth of the metaverse segment continues, even with the volatility in the crypto industry.

“In the long term, Web3 remains mega-mega bullish, so newbies keep learning and developers keep building,” he said.

According to the head of Polygon, the bear market will last until the Fed “eliminates” uncertainty in the global market and copes with inflation. Nailwal noted that “there may be a breather,” and there is still “gunpowder in the powder flask to be aggressively bullish in the cryptocurrency market.” But the likelihood of such a scenario is doubtful, given the anxiety of investors associated with “strong inflation and stagflation.”

Meanwhile, the US Federal Reserve raised the base rate by 0.75 percentage points to 1.5–1.75%. This was the biggest increase since 1994.

The head of the analytical department of AMarkets, Artem Deev, noted earlier that the rate increase by 0.75% at once “would be a recognition from the regulator that inflation is out of control.” According to him, the indices of international exchanges can lose up to 5%, digital assets will also become cheaper. For example, the BTC rate may fall below the $20,000 level.

And the head of Cryptorg, Andrey Podolyan, on the contrary, claims that with an increase in the rate, the cost of bitcoin will go up sharply, to the region of $25,000–26,000.

“But even if it happens, in my opinion, such a rebound will be used to accumulate new shorts. The pressure on the cryptocurrency has not gone away,” the expert said earlier.

Aaron Chomsky, head of the investment department at ICB Fund, is confident that rate manipulation is unlikely to seriously affect the digital currency industry. He believes that the fall of the cryptosphere is due to the fact that large investors take profits and force weak players out of the market in order to then pick up assets with attractive rates and send them to new price highs.