• Thu. Apr 18th, 2024

According to a professional market analyst, the US Federal Reserve might be influencing market movements. Analyst Caleb Franzen believes the bank’s monetary policies affect asset prices and crypto.

Also, Franzen made these analyses at the “Best Business Show” on the 20th of June. The show’s host, Anthony Pompliano, interviewed the senior analyst about the ongoing crypto crisis. 

While speaking, Franzen argued that the Fed controls the prices of assets. Also, He stated that rates and asset prices are inversely related.

As a result, when rates increase, the prices of assets go down and vice versa. This was seen when the US Fed announced an increased interest rate last week.

Correlated Selloffs Across Various Markets 

Currently, assets in crypto and the stock market are selling-off. This is due to the US Reserve’s strict treasury yield and monetary policy. According to Franzen:

“There has to be a change in the market environment for a bull market to occur. The macroeconomic monetary environment has to change so prices of assets can go up.”

Meanwhile, financial analysts believe the macroeconomic monetary climate must be controlled. This means more interest rate spikes and a reduction in inflation. Afterward, the crypto market can start to improve. 

Franzen noted that the US Fed is responsible for the recent market curve. Hence, if the same inflation data occurs again, it could mean a change in monetary policy.

No Cryptocurrency Spring Yet

Let us compare the present market to the cryptocurrency bear market that occurred in 2018. One thing stands out. The lowest price occurred in December when the US Fed suspended rate hikes.

Also, the change occurred the same month when a big drop occurred in the stock market. Furthermore, similar declines took place in March 2020. This was when the US Fed announced the provision of support to the financial system.

On the other hand, crypto markets surged in November 2021 after the Fed initiated tapering. Franzen noted that:

“This theory is a crude and simple metric that determines the prices of assets. However, it has been accurate in its predictions.”

Charlie Bilello, Founder of Compound Capital Advisors, talked to Pomp some days ago. He gave similar analyses and predictions.

The analyst also reaffirmed that the US Fed influenced the prices of assets. Also, he argued that they were in control of how the market cycles occurred.

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