In the past two years, rising interest rates have had a significant impact on commodities such as stocks, cryptocurrencies, and oil.
The impact of rate hikes on the market has been ongoing for over two years and is expected to reach a critical point in mid-2023. The Federal Reserve has kept interest rates unchanged in 11 out of the past 12 meetings, including the meeting on X date. Prior to this, the Federal Reserve had raised rates twice in the previous economic cycle.
Currently, few analysts doubt that interest rates will begin to decline as long as the inflation rate remains under control at 3.3% in March. Different asset classes have responded differently to rising interest rates.
Cryptocurrencies, along with other high-risk assets, have declined, while many commodities, including oil, experienced a rebound in early 2022, although these gains were short-lived. With the Federal Reserve slowing its rate hikes and stopping them in 2023, both oil and cryptocurrencies seem to have stabilized.
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Furthermore, when the Federal Reserve announced plans to raise rates in 2021, 2022, and the full year of 2023, the value of cryptocurrencies declined along with other risky assets.
However, volatility in the banking sector has led many traders to turn to banks, believing that future rate hikes will not be as aggressive. As the yield on 10-year Treasury bonds peaked in January 2023 and subsequently declined, the prices of risky assets rose.
