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Crypto markets finish week down after Federal Reserve meeting

By Robert Davis

22:33, 17 December 2021

Cryptocurrency exchange rate panel
Cryptocurrencies were down this week after Federal Reserve announcements - Credit: Shutterstock

Some of the top cryptocurrencies by market capitalisation lost ground this week after the US Federal Reserve Bank announced it is going to accelerate its plans to taper asset purchases and raise interest rates.

Bitcoin finished Friday’s trading session down 3.6% to $46,347 per unit and is down more than 4% over the last seven days.

Ethereum faced a similar slough on Friday, ending down 4% to more than $3,800 per unit.

Other popular assets like Polkadot and XRP faced even steeper losses on the week. Polkadot finished down more than 7% on Friday to $24.44 per token and is down more than 8.5% over the last seven days.

FOMC meeting

The markets saw a slight bump on Wednesday after following the FOMC meeting as the Federal Reserve announced three potential rate hikes in 2022.

The increase was reflected in a 2.15% spike for the tech-heavy Nasdaq Composite Index as well.

“Given most of this was priced in over the last couple of weeks, risk assets almost instantly responded in a positive way,” Jimin Noh, an analyst at Delphi Digital, wrote in a note to investors.

However, these gains were short-lived as the markets spent the rest of the week digesting the continued risk of inflation, the spread of the Covid-19 Omicron variant, and corresponding supply chain issues.

XRP/USD

0.54 Price
+12.810% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.01168

BCH/USD

374.05 Price
+3.300% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 2.50

ETH/USD

3,156.92 Price
+1.400% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 6.00

BTC/USD

58,735.05 Price
+1.960% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 106.00

Avalanche returns

Despite the heavy losses among the market leaders, one asset stood head and shoulders above the rest over the last week.

Avalanche ended Friday’s trading session up more than 8% to $110 per unit as developer activity on the platform increased.

The platform is similar to Ethereum in that it executes smart contracts for each transaction, but Avalanche runs three distinct blockchains which allows it to reduce its transaction fees.

Over the last seven days, Avalanche has gained more than 30% in value and is on a trajectory to set a new all-time high.

According to a recent note from analyst Genevieve Yeoh at Delphi Digital, there are more than 400 developers with 70,000 smart contracts deployed on Avalanche’s platform.

Most of the activity increased after Avalanche released its Chainlink Price Feeds in July, the note says. The Chainlink gave developers more tools to build advanced decentralised finance (DeFi) applications on Avalanche’s open-source platform.

Read more: What comes next after the recent bitcoin price crash?

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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