It is no longer a secret that inflation is rising worldwide as consumer price indices reach new highs in both the UK and the United States. While the US feds decided to keep interest rates and accelerate the bond contraction, the Bank of England (BoE) took a different decision.
Inflation in the UK has reached a 10-year high and Bank of Englandresponded by raising interest rates to contain rising inflation. It also became the first major bank to raise interest rates since the pandemic began. The nine-member Monetary Policy Committee voted 8 to 1 to raise the Bank Rate from 0.1% to 0.25% (external member Silvana Tenreyro gave one dissenting vote).
Governor Andrew Bailey noted:
“We are concerned about inflation in the medium term. And now we’re seeing things that could threaten that. That’s why we have to act.”
FedNo change in interest rate on Wednesday helped the crypto market turn green as the majority of crypto assets bounced back to daily highs. With the BOE’s rate hike, the crypto market hasn’t reacted much as it has lost its gains from Wednesday.
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The crypto market has been on a decline in terms of monthly returns since November, and December is not looking very encouraging as we enter a new year. with the highest value Bitcoin (BTC), rebounded above $49k yesterday but failed to consolidate its position. BTC is currently trading at $47,533, down 3% in the last 24 hours.
Ethereum (ETH), the second largest cryptocurrency by market cap, lost the $4,000 support again after retrieving it yesterday. The altcoin is currently trading at $3,948 with eyes set on $4,000. It has lost close to 1.33% in the last 24 hours.
Apart from the top two cryptocurrencies, the rest of the crypto market has taken a similar minor downtrend. As the third wave of COVID begins to take effect in the mainstream market, inflation protections like gold and silver will rise first, and just like the end of 2020, we may see a Bitcoin rise that could extend into 2022. However, it should not be forgotten that many central banks seem to be inclined to make decisions to increase interest rates in the new year.
Disclaimer: What is written here is not investment advice. Cryptocurrency investments are high-risk investments. Every investment decision is under the individual’s own responsibility. Finally, Koinfinans and the author of this content cannot be held responsible for personal investment decisions.