It Gets Crazy: Bitcoin was heavily volatile on Wednesday after the Federal Reserve announced an interest rate hike of 75 basis points. This is the most hike the central bank has attempted since 1994, showing urgency in its effort to tackle rising inflation.
- At the time of writing, bitcoin is trading at $20,457. After reaching $21,222 at around 17:55 UST, it traded as low as $20,079 at around 18:10 UST.
- Bitcoin has a tendency to experience volatility when the Federal Reserve announces an interest rate decision. However, the real effects of the announcement are often not felt until a few days after it occurs.
- Last month, the Fed announced a 0.5% increase – at the time the most in 22 years. Bitcoin pumped briefly after it appeared, but was later dumped along with the stock market.
- However, the opposite may be true of this increase. Some believe the market may have already hiked rates after CPI inflation was recorded at 8.6% last Friday.
- This alone suggested that the central bank could raise rates faster than previously planned, despite rejecting the 75-point hike in the last meeting.
- At the Federal Open Markets Committee press conference today, Chairman Jerome Powell confirmed that the Fed will continue to work “rapidly” to bring down inflation.
- This includes reducing the size of the Fed’s balance sheet and implementing 75 basis point rate hikes in the future. However, decisions will be made “meeting by meeting”.
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