After the central bank increased interest rates, as expected, by 50 basis points on Wednesday, Chairman Jerome Powell took a more aggressive 75 basis point hike off the table for upcoming meetings. He also said he expects 50 basis point rate increases at the Fed's June and July meetings.
Last Wednesday's relief rally in stocks, accompanied by a dip in bond yields, was short-lived. Thursday's whipsaw wiped out and then some the prior session's stock advance as bond yields soared. That dynamic continued Friday and in Monday's premarket. The Fed increased rates 25 basis points in March and it's expected to hike at least that much at its meetings in September, November and December.Bitcoin plunged over the weekend and dropped another 5% on Monday, going below $33,000 as the world's largest cryptocurrency remained correlated to tech stocks and the Nasdaq.
The pattern of late goes against the argument of bitcoin as an inflation hedge. But to be fair, gold, which has long been an investment to protect against inflation, has also suffered in Wall Street's recent rough patch. Bitcoin has dropped 50% from its all-time high of more than $68,000 in November, caught up in this year's risk asset drubbing due to rising inflation and tighter Fed policy as well as Russia's war in Ukraine. Bitcoin has seen many boom and bust cycles over the years.Permian Basin rigs in 2020, when U.S. crude oil production dropped by 3 million a day as Wall Street pressure forced cuts.