Market Volatility Continues As Fed Meeting Begins

Cryptocurrency investors are closely watching the Federal Reserve as it meets this week, as market volatility has spiked amid rising concerns over inflation and future interest rate hikes.

The Federal Reserve has signaled that it intends to raise interest rates in 2022 to combat sustained higher inflation, which has continued to plague the Biden administration.

The market volatility which began late last week continued into Monday and Tuesday, with the market showing wild swings that both exhilarated and exhausted investors.

Meanwhile, unlike previous market cycles, the recent price movement of major cryptocurrencies appears to be highly correlated to that of the stock market, especially tech sector stocks.

So does this all represent a new “frame” for cryptocurrency investing — less “digital gold”, and more of a bet on nascent technology?

“Certainly as the investor base of crypto continues to grow, there’s more variety in investment theses,” said Scott Hawksworth, the co-founder of Cryptogic. “And even as this recent volatility may seem extreme to newer investors, they should be aware that crypto volatility continues to trend downward over time, though it’s still quite significant, obviously.”

As the Fed clarifies its intentions this week, investors of all stripes will learn what’s in store for interest rates. It remains to be seen if crypto will continue to rise and fall in a trend with all risk assets — or if it will again take on a direction of its own.

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Andy Hagans

Andy Hagans is the co-founder of Cryptogic and a recurring guest on its weekly show. He believes that early blockchain investments provide an asymmetric investment opportunity for enterprising investors.