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There is currently a strong correlation between the broader digital currency ecosystem and the U.S. stock market, with a visible sell-off rocking both markets at this time. Drawing on current trends, CNBC's Mad Money Host Jim Cramer discredited the previous short-term positive price fluctuations.
According to the veteran trader, the market will not experience any real rally until rates stabilize at any level.
No real rally unless rates stabilize at ANY level!
— Jim Cramer (@jimcramer) February 28, 2023
The stock market is very sensitive to changes in monetary rates as instituted by the United States Federal Reserve. With the massive inflation being recorded over the past year, the Feds have been very uptight in increasing interest rates. Over the past two meetings of the Federal Open Market Committee (FOMC), Fed officials have tapered down on their rate hikes by 50 and 25 basis points, respectively.
With the recently released Personal Consumption Expenditure (PCE) Index, the Fed's preferred inflation gauge, a 5.4% growth year-on-year was recorded, fueling the likelihood of a return to hawkish rate hikes.
Alex DovbnyaTo Jim Cramer, until these interest rate hikes are stable, market growth momentum will be erratic and largely unpredictable.
How can traders learn from this
Understanding that there is massive volatility that may be extended into the midterm can give crypto traders a sense of caution and a push to hedge their bets as safely as possible in all of their positions.
Cramer is a pan-market analyst whose counsel has not necessarily been favorable to crypto bulls as he leans more pessimistic as far as the digital currency ecosystem is concerned. Cramer is now one of the top vocal critics of Bitcoin as well as other crypto assets, advocating that investors should find the right time to offload their bags before everything turns to zero.
Gamza Khanzadaev
Dan Burgin
Alex Dovbnya
Vladislav Sopov