BTC spikes more than $1,000 within 20 minutes before cooling down, as Feds keep the interest rate unchanged at 0%.
Before jumping onto the new plans by the U.S. Federal Reserve, let us dive into the past few days’ movements in the crypto-verse.
The crypto market has taken a huge hit since the start of 2022, with the oldest crypto, Bitcoin, plunging over 25% and Ethereum over 35% in the past month. Increasing fear among investors is evident by the loss of $1 Trillion in the crypto market.
This bearish trend reverses slowly as time goes on, BTC gained almost 15% in the past 72 hours, as it rises above the $38K mark. But the technical chart indicates the possibility of the retracement is a retest of the fallout. In such a case, a reversal will be seen from the $40K zone and the downtrend will continue.
Speaking more about buyers accumulating BTC at dips, Nayib Bukele, the President of El Salvador, announced that his country bought 410 BTC for $15 million last Friday. The president even tweeted, “Some guys are selling really cheap.” His government plans to launch a $1 Billion, 10-year Bitcoin bond in 2022.
Feds Funding Rates Create A Bull Trap
As the Federal Reserve announced that the interest rate would remain at 0%, BTC spiked from $37,850 to more than $39K within 20 minutes. However, the sparkling rise met a sparkling cool down with the Bitcoin price reversing back to the previous levels.
The federal fund rate is the interest rate at which commercial banks can borrow funds from their peers overnight, in an uncollateralized manner. Therefore, any increased funding rates will result in the rise of credit card interest rates and mortgage costs, as banks will need high revenue sources to outperform the increased funding rates. That is because any increased expenditure impacting credit card bills and mortgage payments means consumers will have less amount of money to invest in the financial market.
Taking a step back into the technical world of price charts, let us have a look at the price movement of major DeFi coins in this bear market.
DeFi Tokens Taking A Major Hit
Tokens of various Decentralized Finance protocols show a huge correctional move in the past week. The majority of the large-cap DeFi tokens take a hit of almost 40% in the past week.
Uniswap
UNI, the native cryptocurrency of Uniswap, a decentralized platform to swap ERC-20 tokens (tokens of various protocols built on the Ethereum blockchain) has fallen by 30% in the past week. The downfall brings the price almost 75% lower than its all-time high of $44.92.
ChainLink
LINK is the native token of Chainlink, one of the most famous Oracle projects, a program built to transfer data in and out of a blockchain in a secure, trustworthy and decentralized manner. The value of LINK has decreased by 40% in the past two weeks.
Fantom
One of the few coins to maintain an uptrend above the 200-Day EMA, FTM grew more than 25% in the past four days, balancing the 22% fall in the past week to a 10% fall in the past two weeks.
On-chain analytics, shows an increased number of transactions on Fantom of 1.2 Million, in comparison to Ethereum’s 1.1 Million. The possible reason behind this is increased attention towards newer products on the network and high yield rewards.
Polygon
Taking a lead on Fantom’s path, the MATIC coin has grown more than 30% in the past 48 hours, at press time, as it surpasses the 200-day EMA. However, the approximately 50% downfall that occurred in the past month still indicates a sellers-driven market.
In a nutshell, the DeFi sector seems to have a hard time as it tries to brush off the bearish attack. Few coins like FTM, MATIC, LRC maintain a bullish viewpoint for upcoming days in 2022, however, some with a dramatic fall like UNI struggles to find bullish relief.
Therefore, traders and investors looking for a relief rally to reinstate the bullish trend will have to wait longer than a little longer. BTC will need to overcome the selling pressure near the $40K to possibly regain the bullish momentum. DeFi tokens can find a push with the listing of DEFI11, the first DeFi ETF, soon to be listed on the Brazilian Stock Exchange.
If you would like to read more articles like this, visit our Website. You can also follow DeFi Planet on Twitter, Facebook, Instagram, and LinkedIn.
