Bitcoin Tumbles As Fed Opts For Restrictive Rates
August 18 2022 - 4:00PM
NEWSBTC
The price trend for Bitcoin seems to be moving with the set rates
of the US Federal Reserve. BTC plunged shortly after the Federal
Reserve’s July meeting. However, from the minutes released on
Wednesday, August 17, policymakers had discussed more interest rate
hikes to fight inflation. They deliberated on the need for
checkmate borrowing costs by increasing rates which could restrict
the country’s economic growth. By that, they could have the
required time and influence in controlling potential inflation.
Related Reading: TA: Ethereum Could Take Hit As The Bulls Show Weak
Hands It’s not surprising to see the recent performance of
cryptocurrency following the news of the Fed’s plans. The assets
are pretty sensitive to such changes. For instance, the market saw
crypto value halving as the central bank implemented its tightening
cycle in March. BTC price data showed a drop of about 2%. This dip
went below its high performance from the lows of both July 15 and
July 26. With the dramatic appearance of the bears in the BTC
market, deliberations are high on different platforms about a
possible sell-off. The crypto market has become more vulnerable to
the possibility of a further increase in rates and the US
restrictive policy. As a result, there could be more spikes of
volatility which could confuse the crypto market. Furthermore, the
move acts against the current market pricing and anticipation for
more cuts in the interest rates in 2023. Also, the price of BTC had
surged impressively to hit a two-month high of above $25,200.
Reactions To Fed And Spike In Bitcoin Interest Rates A Decentral
Park Capital researcher, Lewis Harland, noted that the rates move
to affect Bitcoin adversely. He mentioned that the Fed consistently
handles inflation even as the costs contract the economy. Also,
Michael Kramer of Mott Capital Management observed that there’s no
hope for Fed fund futures traders, that the central banks would
switch to rate cuts in 2023. They expected that once the rate
peaked at around 3.7% by March, it would stall till ending of 2023.
However, the central bank increased the rate by 75 basis points
last month. It now sits between 2.25% to 2.5%. The price of Bitcoin
is slightly recovering today as it hovers around $23,500 against
its low of $23,180 on Wednesday. However, despite the small gain,
the value of BTC is still below the supportive level during its
rising trendline. There are reactions from observers that have come
across the Fed minutes. For example, a former Fed trader, Joseph
Wang, declared that it’s hawkish. Related Reading: Expert Outlines
Best Crypto Assets To Hodl During Crypto Winter In his observation,
the transcript also expresses concerns about the implications of
excessive tightening while managing inflation. But, on the other
hand, policymakers also advised to create normalcy by slowing the
rate at certain levels. Featured image from Pixabay, Charts from
TradingView.com
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