On a 24-hour scale, the cryptocurrency market is showing a notable rise of between 3-8 percent, which is due to the massive collapse the day before. Here are the changes in coin exchange rates over a 24-hour period.

Changes in cryptocurrency rates over the last 24 hours

And this is what the situation looks like over the past week. Here you can see first of all the slump of ETH Etherium, which lost a fifth of its price.

Changes in cryptocurrency rates over the past week

Be that as it may, there are no less serious challenges ahead of us. Especially when you look at the coming events on a global scale.

Credit rate hike in the US

The US Federal Open Market Committee (FOMC) will hold its regular meeting on September 20-21. The main focus of the meeting will be an increase in the benchmark lending rate, with a chance of a full percentage point or 100 basis points increase. The culprit is the consumer inflation report, which turned out to be higher than expected. Similarly earlier experts expected rate increase by 75 basis points or 0.75%, but now FOMC appeared under pressure.

Note that Goldman analysts estimate the chances of a 100 basis point key rate hike in September to be around 1 in 4. Accordingly, a 75 basis point increase, as was the case in June and July, is more likely. However, in November and December 2022 analysts expect an increase of 50 basis points. Hence it can be concluded that experts are assuming that inflation has already peaked and economists will then go ahead with a softer policy stance.

Probability of target rates of 3-3.25% and 3.25-3.5% respectively after the FOMC meeting

Bloomberg analyst Mike McGlone commented on the upcoming event.

The Fed will not soften its policy anytime soon, it’s classic human nature, because now we have an opportunity to find out how serious its mistake was due to premature easing earlier.

McGlone also stressed that the growth of crypto since 2020 has been too rapid and the “scales” should have shifted in the other direction. Herein lies one of the aforementioned “mistakes” of the Fed – excessive US dollar issuance, which is necessary to deal with the effects of the COVID-19 pandemic. Bitcoin will still be a profitable bet for investors in the long term, but the analyst does not rule out a continued collapse in the digital asset market.

As a reminder, raising the lending rate is necessary to fight inflation, but such policies are causing markets to collapse. The most popular stock indices are also falling, as can be seen in the following chart of the S&P 500 since the beginning of this year. The index is down 18 per cent in that time frame.

Graph of the S&P500 index since the beginning of 2022

The fall is due to the fact that borrowing capital becomes less profitable when the rate is high and therefore less capital is attracted to invest in the markets. Experts assume that the Fed will eventually reach its final interest rate target and then maintain this value for some time. Presumably during this period markets can start to rise globally again.

Dollar index rises

Earlier this month the Dollar Index (DXY) rose to 110.78 points, the highest since 2002. After a short-term decline, it is approaching a key point again, and if it breaks through a new resistance level, it might rally upwards.

Growth of the DXY

The impact of the dollar index on the Bitcoin price is best illustrated by the chart below.

Dependence of BTC and DXY

That is, the higher the Dollar Index, the more attractive the currency is in the eyes of investors. As a result, the latter prefer to get rid of other assets in favor of fiat.

According to Cointelegraph’s sources, the growth rate of the index does not yet allow us to talk about a likely change in its trend. Bull run DXY is also negatively affecting gold and stock market returns. That said, among the key reasons for DXY’s rise, experts point to increased demand for the currency globally, as well as geopolitical tensions in Europe.

Etherium moved to PoS

Last week, the most popular altcoin underwent the most awaited upgrade in its history: we are talking about the transition to the new Proof-of-Stake (PoS) consensus algorithm. Unfortunately, the upgrade was not a trigger for the ETH price increase, on the contrary. In other words, the “sell on the news” effect is what they call a market crash when a long-awaited event does occur.

The fall of Etherium after the move to PoS

Bitcoin reacted in a similar way. If some BTC holders were still counting on a local bullrun after Ether’s move to PoS, they too were greatly disappointed last week.

A four-hour chart of the Bitcoin exchange rate

In addition, the upgrade was hardly the only positive news on the horizon on a notable scale.


We believe that the latest collapse in the cryptocurrency market was too strong for both the prospects of a 75 basis point key rate hike. Therefore, this overreaction by traders could well lead to a July-like situation, when the coin market suddenly started to rise noticeably on news of the US recession. However, it would be overconfident to count on anything in such a challenging economic environment, so it is easier to wait for the news to come out. Right now at least we want to believe that US Federal Open Market Committee will not have to raise rates by 100 basis points in September. Something like this has not happened for decades and the market reaction would obviously be appropriate.


Next we have the aforementioned FOMC meeting and the next spike in the Dollar Index. What effect do you think it will have on the market? Share your opinion in our millionaires’ cryptochat. We will discuss other topics there as well.