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Woo Network, Conflux, and Kava prices held quite well even as American stocks continued plunging. WOO jumped by over 11.3% in the past 24 hours as we wrote here while Conflux and Kava soared by over 6%. Bitcoin remained steady at $29,000 while Ethereum and BNB prices held at $1,890 and $325, respectively.
US equities plunge
American stocks continued falling on Thursday as investors reacted to the latest interest rate decision by the Federal Reserve. In it, the bank decided to hike interest rates by 0.25%, bringing the headline rate to between 5.0% and 5.25%. That was the highest rate the US has been in more than a decade.
Analysts believe that the Federal Reserve will now pause rates as it observes the state of the financial market and inflation. The hope is that the elevated inflation will help to limit inflation. Data published last month showed that the headline consumer inflation dropped to 5.0% in March and analysts believe that the situation will continue as crude oil prices continue dropping.
Cryptocurrencies like WOO, CFX, and KAVA did well even as the banking crisis in the US escalated. PacWest stock price has plunged by more than 50% on Thursday while Western Alliance and Comerica slumped. In all, the SPDR Regional Bank ETF dropped by over 5% and has crashed by more than 30% in the past three months.
Therefore, there is a likelihood that we will see more banks collapse this year. Already, companies like First Republic, Silicon Valley Bank, Signature, and Silvergate have all collapsed. And on Thursday, the Dow Jones, Nasdaq 100, and S&P 500 indices dropped by almost 1% each.
Bank collapses impact on crypto
Analysts believe that the collapse of these regional banks has a positive impact on cryptocurrencies for two main reasons. First, some analysts and investors see cryptocurrencies as safe havens which do well when there are elevated risks. They, especially Bitcoin, are now being seen as safe-haven assets.
Second, the collapse of these banks will lead to a slowdown of the American economy and force the Fed to intervene. In periods like these, the Fed tends to intervene by either reducing its quantitative tightening or by reducing rates. A pivot of the Fed will likely be positive for WOO, Conflux, KAVA, and other cryptocurrencies as we saw during the pandemic.
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