According to the Bitfinex Alpha report, the possibility of a U.S. interest rate hike continues to loom over the market after there was more evidence that inflation accelerated again in February and consumer spending was strong. The S&P 500 lost half of its gains in January last month as investors reassessed expectations.
Bond markets, initially optimistic in January that the Fed would soon pause rate hikes, have also reversed course on rate hikes. While Bitfinex Alpha expects more rate hikes, the Fed’s tightening of monetary policy from last year is starting to have an impact on the economy. In the cryptocurrency market, Bitfinex Alpha expects increased volatility in the short term.
The total market capitalization of the crypto market fell below the important $1 trillion mark as the prices of bitcoin and ethereum fell sharply over the weekend. Market dynamics continue to be dominated by futures markets with larger liquidations. Volatility appears to be here to stay.