7 Cryptos to Watch Amid the ‘Tightening’
For several weeks, the news regarding cryptos centered heavily on the Merge – a transition from the energy-intensive consensus mechanism called proof-of-work (PoW) to the much more efficient protocol proof-of-stake (PoS). Unfortunately, the disappointing price action for virtual currencies suggested that the sector suffered from the “buy-the-rumor, sell-the-news” syndrome. Moving forward, the blockchain community must now worry about what I would call the ‘Tightening.’ Of course, I’m referencing the Federal Reserve and its decision last week to hike interest rates by 0.75% . According to the Wall Street Journal , the latest action represented the third consecutive hike of 0.75%, meaning that the central bank is committed to tightening the money supply. Such action will likely impart deflationary forces to the market, particularly for risk-on assets like cryptos. Moving forward, investors must be aware of the paradigm shift in financial incentivization. Under an inflationary cycle, the dollar’s purchasing power declines, creating an active incentive to do something with cash: either spend it or invest it.
7 Cryptos to Watch Amid the ‘Tightening’
For several weeks, the news regarding cryptos centered heavily on the Merge – a transition from the energy-intensive consensus mechanism called proof-of-work (PoW) to the much more efficient protocol proof-of-stake (PoS). Unfortunately, the disappointing price action for virtual currencies suggested that the sector suffered from the “buy-the-rumor, sell-the-news” syndrome. Moving forward, the blockchain community must now worry about what I would call the ‘Tightening.’ Of course, I’m referencing the Federal Reserve and its decision last week to hike interest rates by 0.75% . According to the Wall Street Journal , the latest action represented the third consecutive hike of 0.75%, meaning that the central bank is committed to tightening the money supply. Such action will likely impart deflationary forces to the market, particularly for risk-on assets like cryptos. Moving forward, investors must be aware of the paradigm shift in financial incentivization. Under an inflationary cycle, the dollar’s purchasing power declines, creating an active incentive to do something with cash: either spend it or invest it.