Decentral Block Post

The Federal Reserve hiked rates by 75 basis points on Sept. 21 and Fed Chair Jerome Powell projected another 125 basis points increase before the end of the year. If that happens, it will take the benchmark rate to 4.4% by the end of the year, which is sharply higher than the June estimates of 3.8%. The Fed also intimated that it only expects rate cuts to be considered in 2024.

The expectation of higher rates pushed the 2-year Treasury to 4.1%, its highest level since 2007. This could attract several investors who are looking for safety in this uncertain macro environment. Higher rates are also likely to reduce the appeal of risky assets such as stocks and cryptocurrencies and may delay the start of a new uptrend.

Even though Bitcoin (BTC) faces several headwinds in the near term, it did not deter MicroStrategy from buying more coins. After the latest purchase of 301 Bitcoin, the company’s stash has risen to 130,000 Bitcoin. This shows that MicroStrategy and its executive chairman, Michael Saylor, remain bullish on the long-term prospects of Bitcoin.

Bitcoin and altcoins are trying to stabilize after the Fed’s announcement. Could they start a recovery? Let’s study the charts of the top-10 cryptocurrencies to find out.

BTC/USDT

Bitcoin plunged below the immediate support at $18,626 on Sept. 19 but the long tail on the candlestick shows strong buying at lower levels. The bulls again defended the level on Sept. 21, which is a positive sign.

Bitcoin (BTC) retreated and reversed its intraday gains after the Federal Reserve announced its third consecutive 75 basis point (bps) interest rate rise on Sept. 21.

Traders sold the news

BTC's price dropped circa 6.5% from its intraday high of $19,950, hitting $18,660 minutes after the Federal Open Market Committee's statement. Its decline mirrored a similar sudden correction in the U.S. stock market, with the benchmark S&P 500 dropping 0.5% minutes after the Fed update.

On the other hand, the 10-year U.S. Treasury note yield surged to 3.6% after the Fed's announcement versus 3.56% five minutes before it. Similarly, the yield on the 2-year Treasury note climbed from 3.98% to 4% in the same timeframe.

The U.S. dollar index (DXY), which measures the greenback's strength against a basket of top foreign currencies, surged to 111.57 for the first time in 20 years.

The Fed also published an updated "dot plot," which complied with its officials' individual interest rate projections by the end of 2025. These forecasts signaled additional rate hikes in the future, with the 2022 target sitting at 4.4% and 2023 targeting 4.6%.

Most crypto investors have probably never heard of Wintermute Trading before the Sept. 20 $160 million hack, but that does not reduce their significance within the cryptocurrency ecosystem. The London-based algorithmic trading and crypto lending firm also provides liquidity to some of the largest exchanges and blockchain projects.

As a crypto-native trading firm, meaning digital assets have been the core since its inception in July 2017, Wintermute’s expertise in the sector is attested by $25 million in funding from global venture capital investors like Fidelity Investments, Pantera Capital and Blockchain.com Ventures.

Lending and venture capital firms have limited impact on day-to-day operations

An important distinction sets apart a market maker from the bankrupt crypto venture capital firms like 3 Arrows Capital or insolvent lending and yield platforms like Voyager Digital and Celsius Network. Wintermute’s $160 million hack could have a much more profound impact on the crypto industry, considering how essential liquidity is.

The very nature of these businesses is vastly different. For example, a venture capitalist typically invests in pre-seed or seed capital by funding the projects ahead of its launch. There is definitely a need for early-stage funding for tokens, NFT projects, a decentralized application (DApps) and infrastructure, but the money will eventually come up when a good team, idea and community is assembled.

Furthermore, the failure of a certain venture capitalist, whether it is or is not relevant to the industry, does not damage its competitors' reputation. In fact, the opposite sentiment emerges because it proves that picking the right projects pays off, if the firm has been correctly managing its risk exposure. The same can be said for the yield and lending platforms, which basically compete for client deposits and scramble to offer the best returns.

Most crypto investors probably never heard of Wintermute Trading before the Sept. 20 $160 million hack, but that does not reduce their significance within the cryptocurrency ecosystem. The London-based algorithmic trading and crypto lending firm also provides liquidity to some of the largest exchanges and blockchain projects.

As a crypto-native trading firm, meaning digital assets have been its core since its inception in July 2017, Wintermute’s expertise in the sector is attested by $25 million in funding from global venture capital investors like Fidelity Investments, Pantera Capital and Blockchain.com Ventures.

Lending and venture capital firms have limited impact on day-to-day operations

An important distinction sets a market maker apart from bankrupt crypto venture capital firms like 3 Arrows Capital or insolvent lending and yield platforms like Voyager Digital and Celsius Network. Wintermute’s $160 million hack could have a much more profound impact on the crypto industry, considering how essential liquidity is.

The very nature of these businesses is vastly different. For example, a venture capitalist typically invests in pre-seed or seed capital by funding the projects ahead of their launch. There is a need for early-stage funding for tokens, nonfungible token (NFT) projects, decentralized applications (DApps) and infrastructure, but the money will eventually come up when a good team, idea and community are assembled.

Furthermore, the failure of a certain venture capitalist, whether it is or is not relevant to the industry, does not damage its competitors' reputation. In fact, the opposite sentiment emerges because it proves that picking the right projects pays off, if the firm has been correctly managing its risk exposure. The same can be said for the yield and lending platforms, which basically compete for client deposits and scramble to offer the best returns.

The cryptocurrency industry has grown at a staggering pace. There are now almost 21,000 different coins in existence, across a variety of subsectors. From metaverses to decentralized finance, investors are spoiled for choice.

But a burning question, especially among crypto skeptics, is this: Are there too many cryptocurrencies? We've repeatedly seen how new altcoins can be created in the blink of an eye. Tokens popped up hours after Will Smith slapped Chris Rock at the Oscars — pumping and dumping on low liquidity. And following the death of Queen Elizabeth, the markets were flooded by a flurry of "memecoins" bearing her name. Some critics felt this was in poor taste and argued it was "a bad look for crypto." 

Despite the proliferation of thousands of cryptocurrencies — some with names inspired by major coins — Bitcoin and Ethereum continue to dominate. Combined, the valuations of these two digital assets command a 58.2% share of the entire market. All of this leaves altcoins battling for a much smaller piece of the pie.

Is choice a good thing? 

Let's begin by discussing the arguments in favor of this overwhelming assortment of cryptocurrencies.