Crypto and FOMC As Always Interact, Waiting for FED Decision and Tesla (TSLA) Reports

Crypto and FOMC As Always Interact, Waiting for FED Decision and Tesla (TSLA) Reports

Today’s highly anticipated FED decision could have wide ranging implications across markets as it could alter the current state of economic policy and ultimately favour some markets over others. While there are several scenarios of what’s expected today from the US central bank, the most likely one seems to be a rate increase in March while maintaining QE for the time being , which many investors could see as a slight step back compared to the tone used by the FED recently. On the other hand, if the FOMC decides to surprise investors with a more hawkish than expected approach, it could lead to significant reactions across stock markets and cryptocurrencies even after the recent corrections we have already seen so far. The FED must be very cautious today as it appears to be stuck in a challenging situation, unable to ignore record inflation levels while also having a market that relies heavily on its fiscal policy and any misstep could have greater than expected consequences.

Cryptocurrencies attempt to recover ahead of FOMC decision

Cryptocurrencies and tech stocks have seen the majority of the volatility and pullbacks from recent uncertainty noticed across a wide range of markets to different extents. However, due to their exceedingly volatile nature, cryptocurrency prices moved significantly with the total market cap falling around $1 Trillion as the majority of top 100 tokens dropped around 20% reaching the lowest level in several months and shaking investor confidence in the sector. On the other hand, we are seeing an attempt to recover today with most tokens trading slightly higher ahead of the FOMC decision as some investors expect the US central bank to back off after seeing the massive reaction it’s recent announcements have had. While it remains to be seen whether the FED will go through with its plan, it is clear that a significant increase in volatility has the potential to scare many investors who may not be interested in projects for the long term and are mainly attempting to speculate on their prices for short term gains.

Investors await Tesla earnings report

While many investors will be focusing on the FED’s key decision today, earning season has also been a main topic of discussion with several major companies already publishing their reports. We have seen a variety of contrasting results with some exceeding expectations while others disappointed and ultimately reflected that in a significant share price drop. Tesla will be publishing it’s results today and investors will be looking closely to ascertain if the company is living up to the forecasts or if it also appears to be struggling with rising inflation and supply chain issues. A better than expected result could renew investor confidence in the company that has been able to impress many since being listed on the S&P 500 not long ago, while a disappointment could impact future prospects in addition to share price in the short term.

 

Walid Koudmani

Walid Koudmani

Market Analyst working in UK-Italian-Arabic markets covering a broad range of assets including stocks, commodities, FX and crypto. English, Italian and Arabic Speaker with a B.A in Business Management. Quoted in many prestigious publications including the Guardian, Barrons and Lefigaro and winner of bloomberg top forecast rank Q-2/Q-3 2020.