The cryptocurrency market has been suffering over the past couple of months after staging a solid rebound this year. The scene deteriorated further last week, with the Federal Reserve keeping its policy interest rates unchanged in the 5.25%-5.5% range in its September FOMC.
While the Fed’s decision should have otherwise come as a major boost for the cryptocurrency market, investors’ sentiments were dampened. Investors’ concerns grew following the post-FOMC statement from Fed Chair Jerome Powell, who stated that another quarter percentage point interest rate hike is required this year as inflation remains stubbornly high.
Powell also lowered the forecast for interest rate cuts from four to two in 2024, which is likely to not start before September. This means higher interest rates are going to stay for a longer period than expected earlier.
Also, a 25-basis point hike, which is expected in the Fed’s November FOMC, will take the terminal interest rate of this hiking cycle to 5.6%, much higher than the earlier forecast of 5.1%.
The hawkish stance of the Fed saw treasury yields soar to multi-year highs. The yield on the short-term 2-Year U.S. Treasury Note hit 5.441% on Sep 22, its highest level since 2006. This link is closely linked to the possibility of a near-term economic downturn.
Moreover, the benchmark 10-year U.S. Treasury yield reached 4.494%, hitting its highest level since 2007.
Higher market interest rate has a negative impact on high-growth sectors such as technology, consumer discretionary and cryptocurrency. Last year, the cryptocurrency sector was significantly affected by a stringent interest rate increase approach by the Federal Reserve.
The Fed’s hawkish measure followed by a jump in yields on sovereign bonds saw prices of major cryptocurrencies like Bitcoin (BTC), Ethereum (ETH), Cardano (ADA), Dogecoin (DOGE) and BNB (BNB) taking a hit the following day.
Stocks to Watch
Robinhood Markets, Inc. HOOD operates a financial services platform in the United States. Its platform allows users to invest in stocks, exchange-traded funds, options, gold, and cryptocurrencies. HOOD buys and sells Bitcoin, Ethereum, Dogecoin and other cryptocurrencies using its Robinhood Crypto platform.
Robinhood Markets’ expected earnings growth rate for the current year is 57.3%.The Zacks Consensus Estimate for current-year earnings has improved 16.7% over the past 60 days. Robinhood Markets currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
NVIDIA Corporation NVDA is a major player in the semiconductor industry and has been one of the standout success stories of 2023. As a leading designer of graphic processing units (GPUs), the value of the NVDA stock tends to surge in a thriving crypto market. This is primarily due to the crucial role that GPUs play in data centers, artificial intelligence and the mining or production of cryptocurrencies.
NVIDIA’s expected earnings growth rate for the current year is 219.5%. The Zacks Consensus Estimate for current-year earnings has improved 37% over the past 60 days. NVIDIA currently sports a Zacks Rank #1.
Visa Inc. V is taking a significant step toward modernizing cross-border money movement. In a move aimed at enhancing the efficiency of global transactions, V is expanding its stablecoin settlement capabilities to the high-performing Solana blockchain. This expansion of V includes collaboration with prominent merchant acquirers Worldpay and Nuvei, marking a pivotal development in the world of digital payments.
Visa’s expected earnings growth rate for the current year is 15.3%. The Zacks Consensus Estimate for current-year earnings has improved 0.7% over the past 60 days. V currently has a Zacks Rank #3 (Hold).
Coinbase Global, Inc. COIN offers financial infrastructure and technology to support the global cryptocurrency economy. COIN provides a main financial account for consumers in the crypto space, a marketplace with liquidity for institutional crypto asset transactions, and technology and services for developers to build crypto-based applications and accept cryptocurrencies securely as payment.
Coinbase Global’s expected earnings growth rate for the current year is 84.8%. The Zacks Consensus Estimate for current-year earnings has improved 21.7% over the past 60 days. Coinbase currently has a Zacks Rank #3.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report