Bullish Momentum Floods Crypto Markets Despite Rate Hike

November 7, 2022

Subscribe to our newsletter

Although macroeconomic news events last week left traders second-guessing exactly where crypto prices were going to go next, bullish momentum won out.

After markets were forced lower by another 75 basis point hike from the Fed, crypto markets abruptly rallied after the release of weak unemployment data.

An uptick in unemployment appears to have provided investors with some comfort that the effects of monetary tightening are beginning to be felt.

As Bitcoin pushed above $21,000, optimism within the markets helped to keep Dogecoin above $0.10 even as Musk halted plans for Twitter’s new cryptocurrency wallet.

Bitcoin trades above $21,000 after Fed interest rate hike and jobs reports are released
DOGE remains above $0.10 even as Musk halts Twitter crypto wallet plans
Tim Draper predicts $250K Bitcoin by mid-2023

Bitcoin trades above $21,000 as unemployment rates increase

It has been a week of two halves for the world’s leading cryptocurrency. Although prices initially fell to $20,000 as a result of the Fed’s latest interest rate decision, prices then rallied above $21,000 on Friday as Non-Farm Payroll showed an increase in overall unemployment.

At November’s FOMC meeting on Wednesday, the Fed announced that a further 75 basis points would be added to the US federal funds rate. It marked the fourth 75 basis point hike that the US Central Bank has implemented this year.

Bitcoin, which has become extremely sensitive to changes in monetary policy, quickly tumbled to $20,050 on the back of the news.

Bearish momentum increased further as the Fed Chair, Jerome Powell, acknowledged that rates will continue to move higher than expected heading into 2023.

However, bearish price action was cut short by US Non-Farm Payroll data. According to the US Bureau of Labor Statistics, the US added a better-than-expected 261,000 jobs in October but also witnessed a spike in unemployment to 3.7%.

In the past, stronger-than-expected Non-Farm Payroll figures have caused the price of Bitcoin to fall, however, crypto markets were buoyed by the rise in overall unemployment.

While stronger-than-expected Non-Farm Payroll figures would have certainly left the door open for further interest rate hikes, the rise in overall unemployment was a change warmly welcomed by investors. Many accepted it as a sign that tighter monetary policy was finally beginning to impact the economy.

Investors now look to October’s Consumer Price Index (CPI) results that will be released this week to see if monetary tightening is also beginning to have an effect on inflation.

After unemployment figures subdued worries of monetary tightening, bullish optimism returned to the crypto markets. Bitcoin climbed to a weekly peak of $21,400, while Ethereum echoed the move by climbing to a weekly peak of $1,675.

US Unemployment Rate between November 2021 and October 2022.

DOGE remains above $0.10 even as Musk halts Twitter crypto wallet plans

DOGE continued to trade above $0.10 last week, as bullish enthusiasm surrounding Elon Musk’s takeover of Twitter continued to take effect. Although a halt to crypto wallet plans depressed price movements.

Musk finally acquired Twitter on 27th October, and has already set about significantly changing the social media platform.

In a bid to lower the dependency of the platform on ad revenue, the entrepreneur confirmed last week that a new $8 per month charge will be implemented for all accounts wishing to acquire a verified tick symbol in their profile. Musk has also slashed Twitter staff and is looking for a solution to tackle imposter accounts.

In addition, according to tech blogger, Platformer, Musk has also decided to halt the development of a proprietary cryptocurrency wallet that would enable users to deposit and withdraw funds to Twitter without the need for a third party.

As a result of the crypto wallet update, the price of DOGE dipped over the weekend to retest the support level of $0.11.

Due to Musk’s pro-Dogecoin stance, Dogecoin holders hope that the meme cryptocurrency may one day be implemented into the payment aspects of the Twitter platform. But this is yet to be seen.

While Musk’s initial improvements to Twitter have subdued advances in Dogecoin’s price, the overall optimism of a Dogecoin/Twitter collaboration kept the coin trading well above $0.10; a price interval not seen since May 2022.

Many analysts have speculated that Musk’s priorities are currently on generating as much revenue as possible for the platform, which can then be funneled back into projects such as Twitter’s crypto wallet.

Tim Draper predicts $250K Bitcoin by mid-2023

At last week’s Web Summit 2022 in Lisbon, billionaire investor and Bitcoin bull, Tim Draper, added a 6-month extension to his prediction that Bitcoin will reach $250,000 per coin.

Draper, who has famously predicted Bitcoin price movements in the past – correctly predicted Bitcoin would rise above $10,000 back in 2014. He has since predicted that Bitcoin will reach $250K.

At a party hosted by his own Draper University, Draper predicted $250K per coin back in 2018. At the time he stated that the time limit for his $250K prediction would be the end of 2022.

However, speaking at the Web Summit last week, Draper explained that while his $250K price prediction still stands, he is adding a 6-month extension to it.

“By mid-2023 – I’m expecting to see Bitcoin at $250,000,” he told the audience of Web Summit 2022. He also explained that believes the demand for Bitcoin will come from “retail spending”, a demand that will mainly be driven by women.

Once Bitcoin can be easily used to purchase things such as food, shelter, and clothing, he said “there will be no reason to hold on to fiat currency.”