Daily News | Crypto and Equity Prices Recover After Jan FOMC Meeting, Frax Finance Boosts Stability with Fully Collateralized Stablecoin

2023-02-23, 02:17

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## Crypto Daily Digest: Cryptocurrency and Stocks Decline Ahead of Federal Reserve Meeting, But Recover Following Release of Minutes

Good morning, traders! Let's seize this Thursday and make the most of it! 🚀

The recent Federal Reserve meeting minutes revealed a hawkish outlook and raised interest rate hike forecasts that caused a decline in US shares, leading to an anticipated cautious opening in Asian stocks. Shares in Australia and Hong Kong fell, and while Treasury yields rose, the dollar remained stable. The Fed's interest rate cycle could peak at nearly 5.4% in July, according to market pricing. Meanwhile, the Bank of Korea is expected to keep interest rates unchanged at 3.5%, and oil prices have fallen for six consecutive sessions.

John Williams, the head of the New York Federal Reserve Bank, highlighted the need to uphold the Fed's goal of a 2% inflation rate and ensure that monetary policy balances supply and demand to reduce inflation. He explained that the services sector is facing constant price pressures due to high demand, leading to slower price decreases. He also pointed out that continuous supply chain issues are likely to maintain demand for goods. Some Fed officials have recommended a quicker rate hike to reach the peak rate, anticipating higher interest rates than previously predicted.

The release of the January meeting minutes caused initial declines in both cryptocurrency and stocks. <a href="/price/bitcoin-btc" target="_blank" class="blog_inner_link">Bitcoin</a> fell by as much as 3.5% to $23,582, but since the minutes' release, it has regained nearly 2% and seen prices rise above $24,000. Other altcoins and meme coins experienced similar declines but regained most of their losses. However, <a href="/price/bitcoin-btc" target="_blank" class="blog_inner_link">Bitcoin</a> and Ether are exhibiting opposite trends in the amount of cryptocurrency being deposited and withdrawn from exchanges. Although this divergence is noteworthy, it may not accurately forecast future investor behavior. Despite <a href="/price/bitcoin-btc" target="_blank" class="blog_inner_link">Bitcoin</a>'s prices being up for the year, investors may be focused on risk management rather than selling due to negativity. Conversely, investors have been removing ETH from exchanges even as prices have decreased. The contrast in exchange net position has not spread to the derivatives market, where funding rates for both cryptocurrencies are positive, indicating that long-position traders are willing to compensate short-position traders to maintain their bullish stance.

On Wall Street, Coinbase exceeded revenue estimates during its fourth-quarter earnings, but its stock declined by 2.2%. Meanwhile, Silvergate's stock fell by 3.5% due to a Moody's downgrade, attributed to increased regulatory scrutiny in the US after the FTX collapse. Nvidia has a positive revenue outlook, but Intel has decreased its dividend payment to the lowest level in 16 years. Nonetheless, eBay's projected revenue has exceeded analyst estimates.

## Topic of the Day: <a href="/price/frax-frax" target="_blank" class="blog_inner_link">Frax</a> Finance leads the way in collateralized stablecoins, boosting stability in the cryptocurrency market

<a href="/price/frax-frax" target="_blank" class="blog_inner_link">Frax</a> Finance, a decentralized finance protocol, has taken a significant step towards stabilizing the decentralized stablecoin market by fully collateralizing its stablecoin, FRX, with a 100% target collateral ratio. This move removes the algorithmic element of FRX's stabilization mechanism, which has been a point of concern for market observers. By relying solely on collateral, FRX is expected to become less susceptible to price volatility, making it a more attractive option for users seeking stability in the cryptocurrency market.

The decision by <a href="/price/frax-frax" target="_blank" class="blog_inner_link">Frax</a> Finance reflects a broader trend towards more collateralized stablecoins in the decentralized finance market. This trend has been driven by the collapse of several algorithmic stablecoins last year, which highlighted the risks of relying solely on algorithms to stabilize the price of stablecoins. The shift towards more collateralization is expected to increase stability in the market and reduce the risk of contagion during periods of market turbulence.

<a href="/price/frax-frax" target="_blank" class="blog_inner_link">Frax</a> Finance's decision to fully collateralize FRX is expected to have wider implications for the cryptocurrency market. As one of the fastest-growing liquid staking protocols for ETH, <a href="/price/frax-frax" target="_blank" class="blog_inner_link">Frax</a> Finance is seen as a key player in the decentralized finance ecosystem. Its move to fully collateralize FRX is likely to be seen as a vote of confidence in collateralized stablecoins, and could encourage other market participants to follow suit. In general, this action is a noteworthy advancement for the decentralized stablecoin industry and is anticipated to enhance stability throughout the market.

## <a href="/price/frax-share-fxs" target="_blank" class="blog_inner_link">Frax Share</a> (FXS) $10.622 (+1.35%) - Bullish Outlook

**Overview:**

- ***Closest weekly support zone: 9.997 - 9.392***
- ***Closest weekly resistance zone: 11.865 - 13.210***
- ***Key Level: 9.392 (Monthly Close of Mar. 2021)***

![](https://gimg2.gateimg.com/image/article/1677118647Untitled0223.png)

Looking at the higher timeframe, the price of FXS has been consolidating for almost a month. This consolidation area aligns with a golden zone that was determined using the Fibonacci Extension tool, following an upward movement in January. The consolidation area is located between the Weekly level of 13.210 and the Monthly level of 9.392. However, there have been several rejections over the past few weeks, which may result in further downward movement for FXS before it may be able to break the current consolidation/resistance zone. According to the volume profile indicator, the price level with the highest orders is within the range of 6.2 - 6.0, although it is not very likely to reach that low. A probable scenario is that FXS will experience a pullback between 8.160 and 6.764, to attract more buyers, before we see another leg-up.

**Weekly Resistance zones**

1. 11.865 - 13.210
2. 16.467 - 17.797
3. 19.312 - 24.008

**Weekly Support zones**

1. 9.997 - 9.392
2. 9.020 - 8.160
3. 7.263 - 6.764

<div class="blog-details-info">
<div>Author:** Peter L.**, Gate.io Researcher
<div class="info-tips">\*This article represents only the views of the researcher and does not constitute any investment suggestions.
<div>\*Gate.io reserves all rights to this article. Reposting of the article will be permitted provided Gate.io is referenced. In all cases, legal action will be taken due to copyright infringement.
</div>

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