While the European Central Bank (RCB) was going to raise interest rates by 75 basis points yesterday, both the statements in the decision text and the statements of ECB President Lagarde came forward with the message of fighting inflation with determination.
In addition, Fed Chairman Jerome Powell stated that they are strongly committed to reducing inflation and said, “We must continue until the job is done.” Noting that the longer the inflation stays above the target, the greater the risk, Powell said that history strongly warns against the policy of early easing.
After the aforementioned statements, the markets started to see it as almost certain that the Fed’s September meeting and the ECB’s October meeting will increase by 75.
Across 2022, an inverse relationship between US Treasury bond yields and cryptocurrencies was noted. As bond interests rose, cryptocurrencies, especially Bitcoin, decreased in general.
In fact, in the light of the latest statements, the yield on US 10-year Treasury bonds continues to hover around the 11-year high with 3.31 percent.
ETHEREUM EXCEEDS $1,700
However, despite this, Bitcoin gained 7.7 percent today and climbed above $ 20,600. Ethereum, the second largest cryptocurrency in terms of market capitalization, gained 5.8 percent daily, reaching over $ 1,700. Binance Coin rose 5.4 percent, Ripple rose 5.1%, Cardano 4.8 percent, Solana 9.4 percent and Polkadot 8.2 percent.
Analysts stated that despite the rise in bond yields, the clouds of uncertainty in the markets were dissipated with the clarification of expectations from the Fed and ECB. He pointed out that the decreasing uncertainties increased the risk appetite.
POSITIVE CONTRIBUTION FROM ‘MERGE’
In addition, the expected ‘Ethereum merger’ is also contributing to the positive headwinds in the cryptocurrency market.
With the biggest update in Ethereum history starting September 15, the core technology of this cryptocurrency network will change from a proof of work system to a proof of stake system. Thus, confirmation of users will be sufficient in mining, not complex computer calculations. With this update, it is claimed that electricity consumption in Ethereum will decrease to 1 percent of its current level.