The United States Federal Reserve on Thursday raised interest rates by 0.75 percent, the biggest increase in three decades. However, the central bank has indicated that additional increases are due later this year.
Bitcoin fluctuated significantly after the Fed announced a rate hike, a desperate attempt to counter rising inflation. The action represents another record-breaking policy rate hike, leaving the BTC price in a tizzy.
At the time of writing, bitcoin was trading at $22,613, down 25% over the past week, according to data compiled by Coingecko on Thursday. After reaching $21,222 around 17:55 UTC, BTC dropped to $20,069.
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Powell says the labor market is tremendously tight, and inflation is far too high. Image: Justin Lane/EPA.
Bitcoin Volatility After Fed Hike
According to analysts, Bitcoin faces volatility when the central bank announces interest rate decisions. However, the real effects of disclosure are usually not noticed until a few days later.
According to Noel Acheson, head of insights at Genesis Trading, quoted by Yahoo Finance, the cryptocurrency markets are still heavily influenced by the macro mood.
Acheson said the relief rally is welcome in light of recent events in the cryptocurrency market.
The Fed announced a 0.5% increase last month, the highest increase in 22 years. Following the disclosure, there was a temporary rise in bitcoin, but in the following days, it fell in tandem with the stock market.
On the other hand, this increase could be just the opposite. In light of last Friday’s 8.6% CPI figure, some believe that the markets have already increased the rate.
Crypto total market cap at $937 billion on the daily chart | Source: TradingView.com
Powell says inflation is too high
The bitcoin and cryptocurrency markets have taken a major hit over the past several weeks as investors sold off riskier assets.
Federal Reserve Chairman Jerome Powell said at a press conference on Wednesday after announcing the decision that “the current picture is clear. The labor market is very tight, and inflation is very high.”
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As dire predictions of a potential 100 basis point rate hike did not materialize and the market had originally expected from the Federal Open Market Committee (FOMC) meeting on June 15, the altcoin market also experienced a modest price increase. .
The digital asset market is highly linked to the equity markets. Today, bitcoin followed the stock market, as it has for much of this year: the S&P 500 and the Dow Jones Industrial Average both plunged into the news before recovering.
Featured image from Cryptor Trust, chart from TradingView.com
