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Bitcoin seesaws following Fed rate hike announcement

Yahoo Finance’s Ines Ferre joins the Live show to break down how cryptocurrencies reacted to the Fed policy decision.

Video Transcript

BRAD SMITH: Welcome back, everyone. Bitcoin and Ethereum are both lower here on the day. Fractionally for Bitcoin, they're by about 8/10 of a percent. Ethereum, though, down 3.8% as investors continue to digest yesterday's Fed decision, kind of annex that to some of the more speculative assets out there, crypto being one of those. Yahoo Finance's Ines Ferre joins us now. Ines, what are we tracking here?

INES FERRE: Yeah, so right after that Fed decision came out, we saw that Bitcoin had fallen from 19,700 to about 18,700, just a minute after that 75 basis point hike announced by the Fed. Then it bottomed at around 18,600.

And let me pull up a chart for you so you can see on our YFi Interactive board. I'm going to pull up a two-day chart because remember that Bitcoin trades 24 hours. So you can see the volatility here, right around here when that announcement came out. So it went down, it went up, it went down. So, very similar to what happened with other assets as well.

And as far as Ethereum is concerned, also Ethereum, that's been on a downtrend, by the way, over the last 10 days or so. But you can see also the volatility that we saw with Ethereum. Look, the bottom line is this, that these Fed rate hikes are having an impact on crypto assets. The Fed wants assets to come down, all types of assets-- housing, equities, cryptocurrency.

And it is having an effect. We're definitely in a crypto winter. The strong dollar does not help here either because that strong dollar, it's a dollar against other currencies. And that also depresses prices of cryptocurrencies, depresses prices of commodities, equities, et cetera.

JULIE HYMAN: It seems sort of naive in retrospect, doesn't it, that view, the original view that crypto could be an inflation hedge, right? Because if you're tightening financial conditions and you're taking liquidity out of the system, it makes sense that people would have less to go out and spend on those cryptocurrencies.

INES FERRE: Exactly, and that's-- I mean, the Fed's not going to necessarily say that, but that is what they-- they want to bring down these prices so that you're not flush with cash. You're not flush with these lofty asset prices.

JULIE HYMAN: Right. Well, guess who is flush with cash seemingly? FTX, Sam Bankman-Fried's, of course, crypto company. There are some reports that he's getting some new financing.

INES FERRE: Yeah, that's right. So there's a report out from CNBC that the FTX is looking for investments that is-- in talks with investments of a billion dollars that would be in line with the company's valuation of $32 billion, that valuation from previously this year. Now, that is very interesting because we have seen crypto assets coming down in prices. So to have that same valuation says something, correct?

Coinbase had previously reported that FTX was looking for an investment. It was also looking to acquire another company that was perhaps a retail focused company, and that it would be looking for an investment if it was going to acquire another retail focused company. Now, we know that Sam Bankman-Fried has a stake-- personally has a stake in Robinhood, 7.6% stake in Robinhood. So we'll see what that other investment could be or, yes, that acquisition could be.

JULIE HYMAN: Hmm, we shall see. Thank you, Ines. Appreciate it. Certainly, he's been acquisitive as it is. Thank you.