On Thursday, European Central Bank (ECB) raised interest rates by another 75 bps. The ECB expects to raise interest rates further to hit the medium-term inflation target of 2%. Volatility increased in the crypto market as the U.S. Dollar Index (DXY) jumped higher, but subdued later. The largest cryptocurrencies Bitcoin (BTC) and Ethereum (ETH) price soars almost 1% each after the ECB hiked interest rates.
Macros Improved Amid ECB Rate Hike and US GDP Report
The Governing Council of the ECB on October 27 raised the interest rate by another 75 bps. ECB believes the third continuous 75 bps rate hike will ensure a timely return of inflation to the medium-term inflation target of 2%. Moreover, the council adjusted the interest rates applicable to targeted longer-term refinancing operations (TLTRO III) from 23 November 2022. It will help offer voluntary early repayment dates for banks.
“The interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will be increased to 2.00%, 2.25% and 1.50% respectively, with effect from 2 November 2022.”
The U.S. Dollar Index (DXY) subdued after the ECB raised interest rates despite recession fears. Meanwhile, the U.S. Q3 GDP comes in higher at 2.6% against the expected 2.4%. It is the highest GDP growth since Q4 2021 and after recording negative GDP growth in the last two quarters. Thus, containing the U.S. from officially falling into recession. Elon Musk earlier said the U.S. economy is actually growing strongly, but Europe and China risk falling into recession.
Bitcoin and Ethereum Prices Soars Higher
The broader crypto market witnessed a further increase in prices as macros improved. Bitcoin (BTC) price soared over 1% in an hour, with the current price trading at $20,708. Meanwhile, Ethereum (ETH) price jumped almost 2% in an hour and 4% in the last 24 hours. The ETH price is trading at $1,573.
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