Crypto Market Reacts to ECB and BoE Interest Rate Increases

The interest rate hike by the ECB and Bank of England

Caused the cryptocurrency market to fall to new further lows.

The European Central Bank (ECB) joined the U.S. Federal Reserve and other central banks around the world in ramping up their fight against inflation on Thursday by marginally slowing down its record rate of interest rate hikes. In an effort to combat the high costs that are burdening consumers in the three countries, interest rates were raised by 0.5 percentage points by the central banks of Switzerland, the eurozone, and the United Kingdom.

The rate rises to 2%

The European Central Bank declared in a statement that it would raise its benchmark interest rate, which had previously been 1.5%, to 2%, the highest level since 2009. It declared that because inflation is expected to persist above the average for an excessively long time, it expects to raise [rates] even more.

The ECB was officially reported as saying, The Governing Council decided to raise interest rates today, and expects to raise them much further, because inflation is far too high and is forecast to stay above the goal for an excessive amount of time.

The banks' global campaign against growing consumer prices has significantly slowed as inflation has modestly declined from extremely high levels.

Coming Rate Increases

However, authorities emphasise that further rate rises are imminent in order to stem the inflation from decennial highs and combat rising housing, food, and energy costs that are destroying people's savings.

Markets React in Crypto

The crypto market fell alongside the stock market yesterday as a result of the U.S. Federal Reserve's announcement of a rate hike of 50 basis points, wiping out all of its gains up until the announcement.

The market kept moving downward after the ECB's statement, and technical indicators like the Relative Strength Index showed signs of more slippage because of weak resistance (RSI).

By market capitalization, Bitcoin is currently the largest cryptocurrency, down from $18,400 to $17,400, while Ethereum, the second-largest cryptocurrency, saw a price drop from $1351 to $1270. Both cryptocurrencies had a 1.2% decline just minutes after the announcement.

With two rate rise announcements in a row, Bitcoin and other prominent altcoins have been unable to recover their prior losses and are now perceived to be under pressure due to weak fundamentals.

The Crypto Fear and Greed Index, a market sentiment indicator, also shows that the indicator is gradually edging closer to the "Extreme Fear" mark, which indicates a condition of growing panic in the market.