Cryptocurrency investors had a tough time in 2022 due to rapid global interest rate hikes. Adding our own issues, we saw a dip below the previous ATH level of $20,000, a first. Unsurprisingly, we have been facing the reality that this decline won’t last forever for months. So, what happens now?
European Central Bank Lowers Interest Rates
At the end of last month, we mentioned that it was almost certain the ECB would cut rates at the June meeting. This would encourage the Fed and other central banks to make cuts. According to the recent decision, the European Central Bank officially announced the end of the tight monetary policy period by cutting interest rates by 25bp.
The Fed’s decision, which will be announced in the coming days, is very unlikely to be a cut. However, if tomorrow’s employment and wage growth data are also positive, we could see further improvement on the macroeconomic front with today’s ECB cut.
“In the second half of the year, we will reduce the PEPP portfolio by an average of 7.5 billion Euros per month. The ECB will continue to take a data-dependent and meeting-by-meeting approach to determine the appropriate level and duration of restraint. We will continue to keep the policy rate tight to the necessary extent by monitoring the data to fight inflation.”
After the announcement, BTC rose to $71,300. Investors predict another 40bp cut before the year ends.
