A crypto influencer, Alfonso Peccatiello, has expressed his thoughts regarding the recent cryptocurrency rally. He said the current crypto rally is not a yardstick for investors to raise their hopes too high. This was revealed following the rise of some digital currencies such as Bitcoin and Ethereum over the past 24 hours.
A recent crypto market watch showed a 24-hour price appreciation of Bitcoin of more than 9%. Currently, BTC is trading at a price above $23,000.
Meanwhile, Ethereum, the second-largest digital currency, has also seen a rise in price. Its 24-hour price increase exceeded 13%. Currently, the token is trading at a price above $1,600.
The surge in the prices of these cryptocurrencies followed the Fed’s decision to raise its interest rate by around 75 basis points.
Alfonso’s thoughts on the current rally
Renowned crypto expert and author of The Macro Compass, Alfonso Peccatiello, has given his take on the current crypto rally. According Peccatiello, the recent surge in digital currency should be no reason for investors to get excited. He said it, accompanying it with an explanation.
Related reading: Bitcoin Makes Surprise Rise as Fed Discloses 0.75 Bp Rate Hike
Peccatiello first admitted that Fed Chairman Jerome Powell’s speech triggered the rise in cryptocurrency prices. But, his speech must be guided. He added that if his speech lacks backup, it will be cause for alarm in the crypto market.
Additionally, he disclosed his portfolio, saying he had little interest in risky assets. One such risky asset is digital currency.
Trigger for the cryptocurrency rally
Taking inspiration from Peccatiello’s speech, the price increase of these digital tokens began after Powell’s statement. He added that Powell had established a relationship between inflation and neutral interest rates.
Powell also indicated that Fed operations will be more data driven. This is the result of recent increases of around 75 basis points.
According to Peccatiello, the Federal Reserve would be a formidable area if it repeated its interest rate hike over time.
Powell is more cautious now that the Fed believes it has reached neutral rates: why?
Because every time the Fed rose above that (restrictive policy) they ended up breaking something.
— Alf (@MacroAlf) July 28, 2022
Then Powell made another statement, which happens to be cause for concern. He cited that there is another alarming increase that could be the trigger for the next FOMC meeting, scheduled for September.
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His final statement highlighted the fate of digital currencies and their returns. He revealed that the Fed needed to tighten aggressively. Peccatiello said this action is necessary to prevent real yields from falling.
Moreover, with falling yields comes weak performance in the crypto market and other risky assets.
Featured image from Pexels, chart from TradingView.com