Ethereum\u2019s native token, Ether (ETH<\/a>), plunged\u00a0sharply hours after the United States Federal Reserve released the minutes<\/a> of its December meeting, showing that it eyes a faster timetable for hiking interest rates in 2022.<\/p>\n The minutes showed that the Federal Open Market Committee (FOMC) is in favor of\u00a0raising short-term rates \u201csooner or at a faster pace than participants had earlier anticipated.\u201d According to the CME Group, trading in the interest-rate futures market showed<\/a> a two-thirds possibility of the first increase in March.<\/p>\n Ether turned lower after the minutes were released, dropping by over 13.50% to as low as $3,300. Its plunge mirrored similar downside moves across the crypto market, with Bitcoin (BTC<\/a>) shedding a little over 9% to nearly $42,100.<\/p>\n Incontestably, ETH\/USD returned more losses to its investors than BTC\/USD after the Fed\u2019s announcement<\/a>. <\/p>\n It appears traders decided to unwind tokens sitting atop better long-term profits than Bitcoin. For instance, Ether\u2019s returns<\/a> in the last 12 months \u2014 even after the Fed-led drop \u2014 came out to be around 175%. On the other hand, Bitcoin\u2019s profits were nearly 15.75% in the same period.<\/p>\n Similarly, Ether\u2019s top rival, Solana (SOL<\/a>), also logged more losses than Bitcoin, dipping by more than 13.75% after the Fed\u2019s news. Nonetheless, its 12-month profits came out to be more than 7,500%, signaling further extreme corrections if the crypto market\u2019s bias remains skewed toward bears.<\/p>\n Ether also plunged against Bitcoin<\/a>, according to the performance of a widely traded instrument in ETH\/BTC in the past 24 hours.<\/p>\n The pair dropped by a little over 5% to hit 0.077 BTC. In doing so, it also reached a critical support level near 0.078 BTC that has recently been instrumental in keeping Ether bullish against Bitcoin by limiting the former\u2019s downside bias.<\/p>\n Meanwhile, the 0.078-BTC support also appeared to be the lower trendline of Ether\u2019s descending triangle. Descending triangles are continuation patterns that typically send the price in the direction of its previous trend after a consolidation period.<\/p>\n That increases Ether\u2019s potential to remain stronger than Bitcoin in the long run, as long as it breaks above the triangle\u2019s upper trendline with convincingly higher volumes.<\/p>\n For months, Fed officials were stuck to the opinion that higher inflation in the U.S. drew its inspiration from supply-chain bottlenecks, with Chairman Jerome Powell asserting that it would resolve by itself. But in the latest meeting, he showed less conviction toward the so-called \u201cinflation-is-transitory<\/a>\u201d\u00a0narrative.<\/p>\n That is primarily because the U.S. consumer price index\u00a0reached a nearly 40-year high<\/a> in November 2021, hitting 6.8% year-over-year. Meanwhile, core consumer prices, which exclude energy and food categories, rose to 4.7% from a year earlier; it came to be above the Fed\u2019s preferred inflation target of 2%.<\/p>\n \u201cThere\u2019s a real risk now, I believe, that inflation may be more persistent and\u2026the risk of higher inflation becoming entrenched has increased,\u201d\u00a0said<\/a> Powell on Dec. 15 after concluding the FOMC meeting.<\/p>\n Madison Faller, a global strategist at JPMorgan Private Bank, told<\/a>\u00a0Bloomberg\u00a0that investors should not fear the Fed, noting that its three planned rate cuts in 2022 would do little in curbing down consumer prices. She said:<\/p>\n \u201cGrowth and inflation will be decelerating throughout 2022, but nonetheless remain above historic trend levels. We think this will call for a much lower risk of a Fed-induced material market correction.\u201d<\/p><\/blockquote>\n As Cointelegraph also covered, fears of persistently higher inflation, which, in turn, tends to devalue cash, have prompted mainstream investors to park their money in the crypto sector<\/a>. <\/p>\n For instance,\u00a0Thomas Peterffy, the billionaire founder of brokerage firm Interactive Brokers Group Inc., admitted that he holds 2%\u20133% of his net assets in crypto just in case fiat money \u201cgoes to hell.\u201d Likewise, Bridgewater Associates founder Ray Dalio revealed last year that\u00a0his investment portfolio contains Bitcoin<\/a>.<\/p>\n The outlook against inflation promised to offer some respite to Ether, which tends to tail Bitcoin\u2019s price movements<\/a>.<\/p>\n Meanwhile, Sean Farrell and Will McEvoy, strategists at Fundstrat Global, noted that investors should increase their investments across the smart contracts sector<\/a> to get the most from the next market rebound.<\/p>\n \u201cGiven the current macro backdrop, leverage within the Bitcoin market, and recent robustness seen in the altcoin market, we think it\u2019s appropriate to be overweight Ethereum and other smart contract platforms,\u201d they said in a note, adding<\/a>:<\/p>\n \u201cWe probably would not bet the farm near-term on Bitcoin but think there is an opportunity in going long volatility via derivatives strategies.\u201d<\/p><\/blockquote>\n The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.\n<\/p>\n<\/div>\n![](\"https:\/\/s3.cointelegraph.com\/uploads\/2022-01\/df5adcde-ffd3-4d00-bb55-bdad6212075e.png\")
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ETH\/BTC reaches key rebound level<\/h2>\n
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Too soon to fear the Fed<\/h2>\n
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