Federal Reserve Could Start Forcing Down Crypto Prices

The Federal Reserve could start forcing down crypto prices and can shock the market into shedding its gains to bring them under control and eventually reduce inflation so let’s read more in today’s latest cryptocurrency news.

The former president of the Federal Reserve Bank in NY Bill Dudley believes that in order to be effective, the Federal Reserve will have to inflict some losses on the stock and bond investors that it has so far. The FED’s tools to push the stock down are focused on increasing the interest rates and enhancing financial conditions. These tend to affect the price of risk-on assets like crypto and tech stocks. A few days ago, moments after the FED meeting was released, the tech stocks dropped and NASDAQ dropped by 315 points. Some stocks like Cloudflare dropped by 10% on the news and while the internet networking company could not be a crypto project, it has a vital role in keeping the web3 infrastructure online.

Cloudflare and Amazon AWS are centralized bottlenecks in the blockcahin space with 20% of the internet traffic passing via the Cloudflare CDN network. Dudley explained that the short-term itnerest rates hikes do little to affect the people in today’s world and this is because most mortgages are connected to the fixed rates over a period of time. He thinks that the market sentiment is focused on the fact that the FED will drop the rates in the next few years and will price this into market participation. Dudley thinks the FED will:

“will have to shock markets to achieve the desired response. This would mean hiking the federal funds rate considerably higher than currently anticipated. One way or another, to get inflation under control, the Fed will need to push bond yields higher and stock prices lower.”

The federal reserve could start forcing the prices down and if we are looking at the long-term relationship between BC and the US Treasury since 2020, there are some interesting patterns. The Treasury note yield increased steadily since the BTC price crash and now it is up by 4900% while BTC is down by 27% from its ATH. The  10-year and 2-year yield curve inverted show a sign of a upcomign recession and this happens as the 10-year fell against the 2-year in the long-term uncertainty on the market due to the global politics.