The recent interest rate hike by the Federal Reserve and the fall of PacWest Bank have failed to startle the global cryptocurrency market. The new interest rate was set by the U.S. central bank with a quarter percentage point increase, from 5.00% to 5.25%, as expected by the financial markets. This is a 16-year high as the Federal Reserve fights persistent inflation.
However, the Federal Reserve ditched the statement that it “anticipates” the need for additional rate increases from the language of its policy statement. The central bank signaled that the current tightening cycle is coming to an end by approving its tenth interest rate increase in just over a year.
Higher rates have substantially increased borrowing costs across the largest economy in the world, causing a slowdown in industries like housing and contributing to the recent failure of three US banks.
PacWest Bank shares tumbled as interest rates surged
PacWest Bancorp, a regional bank in trouble after the failure of three California-based competitors, has been considering a number of strategic options, including a sale.
Citing unnamed sources, Bloomberg reported that despite the bank’s efforts to sell itself, no interested parties had surfaced. According to Bloomberg, PacWest Bank is allegedly considering dissolving the business or seeking funding to survive.
These worries have caused the bank’s shares as well as those of several other regional American banks to plummet in after-market trade. Despite efforts by regulators to put an end to the banking crisis that began with the failure of Silicon Valley Bank and Signature Bank in March, the share decline, which includes a nearly 72% fall this year at PacWest, highlights how investors are still skeptical about the financial condition of regional banks.
Economic Issues Fail to Rattle Cryptocurrency Market
Despite the recent Fed interest rate hike and the collapse of PacWest Bank, the global cryptocurrency market remains strong, though it initially fell slightly. The worldwide crypto market cap was $1.20 trillion at the time of publication, an increase of 2.04% over the previous day, indicating that the digital asset market has reacted favorably to this news.
Bitcoin, the largest cryptocurrency by market capitalization, recently topped $29,000, rising by 2.22% in the last 24 hours. Similarly, each of the top 10 altcoins is up between 0.07% and 3.72% over the last day. This demonstrates how the cryptocurrency industry has become more resistant to external factors and is gaining popularity among a wider range of people.
