The Fed reinitiated its interest rate hike regime in the July FOMC meeting after a pause in the June FOMC. On Jul 26, the Fed raised the benchmark lending rate by 25 basis points to the range of 5.25-5.5%. This marked the highest range of the Fed fund rate since March 2001. Notably, since March 2022, the central bank hiked its interest rate in 10 consecutive FOMC meetings.
Prices of cryptocurrencies are inversely related to the market interest rate. The primary reason for last year’s disappointment was the Fed’s decision to pursue stringent monetary policies and a rigorous hike in the benchmark interest rate to combat 40-year high inflation.
Cryptocurrencies have resumed their northward journey this year after a highly disappointing 2022. However, after the Fed hiked the rate again, prices of cryptocurrencies like Bitcoin (BTC), Ethereum (ETH), Cardano (ADA) and Dogecoin (DOGE) fell 0.8%, 0.9%, 1.2% and 1.5%, respectively.
Cryptocurrencies may face volatility in the near-term as the central bank said that the decision of the future rate hike will depend solely on economic data. At this stage, investors should accumulate cryptocurrencies using a buy-on-the-dip strategy. Every dip in crypto prices will be a good purchasing point in order to gain handsomely once the Fed’s tighter monetary control comes to an end.
Stocks In Focus
NVIDIA Corp. NVDA is a semiconductor industry giant and one of the biggest success stories of 2023. Being a leading designers of graphic processing units (GPUs), the NVDA stock usually soars on a booming crypto market. This is because GPUs are pivotal to data centers, artificial intelligence, and the creation of crypto assets.
NVIDIA’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for its current-year earnings has improved 1.7% over the last 30 days. NVDA currently sports a Zacks Rank #1 (Strong Buy).
PayPal Holdings Inc. PYPL operates digital wallets and allows users to buy, transfer and sell cryptocurrencies, including Bitcoin, Ethereum, Bitcoin Cash and Litecoin. PYPL’s users can check out and pay using crypto to online merchants. PYPL’s mobile wallet Venmo also allows users to buy and sell cryptocurrency.
PayPal Holdings has an expected earnings growth rate of 19.9% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.8% over the last 90 days. PYPL currently carries a Zacks Rank #3 (Hold).
Block Inc. SQ is an online digital and mobile payment platform for consumers and merchants and is the parent company of Square and Cash App. The users of Cash App can buy, sell, send and receive Bitcoin. In addition, SQ’s decentralized tbd platform allows developers to build decentralized finance applications to run on programmable blockchains. SQ is also one of the largest Bitcoin investors.
Block has an expected earnings growth rate of 69% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 3.7% over the last 90 days. SQ currently carries a Zacks Rank #3.
Accenture plc ACN is a global system integrator, which provides consulting, technology and other services, markets Ethereum-based blockchain solutions to businesses to make it easier to process payments.
Accenture’s expected earnings growth rate for the current year is 8.2% (ending August 2023). The Zacks Consensus Estimate for its current-year earnings has improved by 0.1% over the last 90 days. ACN currently carries a Zacks Rank #3.
Interactive Brokers Group Inc. IBKR is a global automated electronic broker. IBKR also others routes, as well as, executes, processes and trades in cryptocurrencies. IBKR’s commodities futures trading desk also offers customers a chance to trade cryptocurrency futures.
Interactive Brokers Group has an expected earnings growth rate of 39.5% for the current year. The Zacks Consensus Estimate for current-year earnings has remained the same over the last seven days. IBKR currently carries a Zacks Rank #3.
Accenture PLC (ACN): Free Stock Analysis Report
Interactive Brokers Group, Inc. (IBKR): Free Stock Analysis Report
NVIDIA Corporation (NVDA): Free Stock Analysis Report
PayPal Holdings, Inc. (PYPL): Free Stock Analysis Report
Block, Inc. (SQ): Free Stock Analysis Report
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