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Avalanche, Fantom, Kadena, Terra, and other Layer 1 coins have posted double-digit gains today.
Layer 1 Projects Rally on Fed Meeting
Layer 1 projects are leading the market again.
According to data from CoinGecko, Avalanche is up 15.4% today, Terra has jumped 10.1%, and Solana has risen 9.9%. Other lower cap projects like Fantom, Elrond, and Arweave have also rallied, with each recording double digit gains. Kadena, a Proof-of-Work Layer 1 project, is outperforming all of them after gaining 21.6%.
The two largest cryptocurrencies, Bitcoin and Ethereum, are also trading in the green, though their jumps have been less significant. Still, the market is showing positive momentum after a relatively sluggish December, likely because of Wednesday’s Fed meeting.
The U.S. central bank hosted its final Federal Open Market Committee of the year yesterday, where it announced that it anticipates three interest rate hikes in 2022. The Fed Chair Jerome Powell also revealed that tapering would be accelerated to $30 billion a month, rather than the current $15 billion. Tapering is a strategy central banks use to reduce the effects of quantitative easing. It focuses on interest rates and slowing asset purchases, topics that have been increasingly at the forefront of investors’ minds since the beginning of the Covid pandemic. The Fed’s balance sheet has doubled from $4 trillion to $8 trillion since January 2020, with exuberant money printing acting as a catalyst for assets to soar in value. Stocks like Tesla and Apple have hit record highs over the last year, and crypto assets have also benefited from the unprecedented macroeconomic environment.
Many celebrated investors such as Paul Tudor Jones have sought refuge in Bitcoin as an inflationary hedge since March 2020, and when it was revealed that inflation was at a 31-year high in early November, the leading crypto asset rallied to $69,000 for the first time. However, the market has looked shaky over the last few weeks. Fears over the Omicron variant have sent fear through global markets, with crypto struggling to post new highs since the new Covid strain was discovered. Many crypto assets have been trading sideways for weeks.
Investors are indicating that the outcome of the Fed meeting is bullish for crypto, but it’s not only digital assets that have surged. The Dow Jones has also risen over 200 points, while the Nasdaq Composite Index is also up 2%.
Disclosure: At the time of writing, the author of this feature owned ETH, FTM, and several other cryptocurrencies.
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