- Bitfinex has warned of a potential correction in the short-term crypto asset market.
- The expectation of a Fed interest rate cut has fueled optimism among traders.
The crypto asset market is bracing itself for a correction as traders exhibit excessive optimism over the Fed’s stance. Bitfinex expert Jag Kuner raised this concern, as reported by The Block.
In late January 2024, the Fed decided to keep interest rates unchanged, with Federal Reserve Chairman Jerome Powell suggesting that a decline in rates in March was unlikely.
During the 60 Minutes program on February 4, 2024, Powell reiterated this sentiment. Kooner highlighted that this should serve as a cautionary signal for the market.
“We anticipate a downward correction in the crypto asset market if expectations of a rate cut persist and the Fed maintains its current trajectory,” emphasized the expert.
Powell has consistently stated that the regulator will maintain a “hawkish” policy until the inflation rate stabilizes at 2%. It is worth noting that BlackRock experts have forecasted a low probability of achieving this by 2024.
Yuwei Yang, BIT Mining Chief Economist, noted that a correction might be on the horizon, and it is not solely dependent on the current Fed rate:
“Also concerning are patterns in the AI stock market that are reminiscent of the dot-com bubble,” he said. “The market is moving cautiously, which might lead to a widespread sell-off following any significant event, including CPI.”