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The Federal Reserve Controls Crypto and Asset Prices: Wall Street Analyst

2 mins
Updated by Kyle Baird
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In Brief

  • The Fed has a lot of influence over market cycles
  • Previous cycle bottoms coincided with Fed action
  • There will be no bull market until monetary policy improves
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A senior market analyst has spoken out about the influence that the U.S. Federal Reserve has on crypto and general asset prices through its questionable monetary policies.

Speaking on Anthony “Pomp” Pompliano’s “Best Business Show” on June 20, senior market analyst at Cubic Analytics, Caleb Franzen, told viewers how the Federal Reserve controls asset prices.

When asked about correlations between a broad spectrum of assets and the current economic environment, he said that yields and asset prices have an inverse correlation.

Correlated market selloffs

With the Fed tightening monetary policy and Treasury yields moving higher, assets across the board are selling-off.

“In that environment we’ve seen asset prices across the board whether we’re looking at stocks or Bitcoin and crypto, or even treasuries in the bond market, everything is selling off,”

Until we see a formal shift in the yield environment there will not be a bull market, he added.

Financial analysts are generally of the opinion that things will not improve for crypto markets until this macroeconomic monetary situation is under control, which means more rate hikes and a major fall in inflation.

Since it is currently at a four-decade high of 8.6%, this is unlikely to happen for many months despite the Fed’s fiddling. It took around 18 months from the first time it topped the target of 2% to reach today’s catastrophic levels.

Franzen stated that the Fed is behind the curve in this environment so if there is a rollover in inflation data, that could be a “general foreshadowing of a reversal in the monetary policy environment.”

No crypto spring yet

Comparing the current market conditions to the crypto bear market of 2018, the bottom was in December when the Fed formally paused its rate hikes. The move coincided with a massive slump in stock markets in the same month.

Similar crashes occurred in March 2020 when the Fed said that it would provide infinite support to the monetary and financial system. Conversely, crypto markets peaked in November 2021 when the Fed announced that they were tapering.

“It’s a super simple and crude metric for where asset prices are going to go going forward but its been super accurate in this monetary wonderland that we’re in,”

Founder and CEO of Compound Capital Advisors Charlie Bilello spoke to Pomp a few days earlier with a similar prediction and analysis. The Wall Street analyst also said that the Federal Reserve was highly influential over asset prices and market cycles, confirming that it is way behind the curve.

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Martin Young
Martin Young is a seasoned cryptocurrency journalist and editor with over 7 years of experience covering the latest news and trends in the digital asset space. He is passionate about making complex blockchain, fintech, and macroeconomics concepts understandable for mainstream audiences.   Martin has been featured in top finance, technology, and crypto publications including BeInCrypto, CoinTelegraph, NewsBTC, FX Empire, and Asia Times. His articles provide an in-depth analysis of...
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