FOMC Meeting Sparks Rally in Global Markets

GB Market Commentary 05/05/2022

by Marcus Sotiriou

Bitcoin and equities rallied yesterday as expected after the FOMC meeting, which resulted in a 50 basis point rate hike. The market clearly priced in this bearish event during the weeks leading up to the FOMC meeting, where we saw significant sell pressure. In addition, Federal Reserve Chairman Jerome Powell was optimistic in the press conference following the announcement of the rate hike – he thinks inflation may have peaked in March. Currently, the data is in confluence with this thesis, as inflation expectations are relatively flat – the University of Michigan Consumer Sentiment Survey and 5-year breakeven rate are both stable. However, we need to wait for more data in the coming months to confirm this.

He also dismissed the idea of a 75 basis point rate hike in June which is what many were predicting, and clarified the Federal Reserve plan to hike rates by 50 basis points in the next 2 meetings. I think the result of this clarity will allow the crypto market to rally in the short-term.

Elon Musk continues to make headlines as he changed his profile picture on Twitter to a montage of BAYC (Bored Ape Yacht Club) Apes, hence causing the BAYC floor price to increase by 10 ETH. followed the BAYC land sale of Otherdeeds, where $320 million was sold in what was considered the largest NFT mint in history. It was so large that by the time the virtual land deeds sold out, buyers paid a total of about $123 million in gas fees as the volume of transactions caused gas fees to soar. This highlights the need for Ethereum to transition from Proof of Work to Proof of Stake where it should become a more efficient blockchain.