Bitcoin Slumps Following Fed Confirmation Of Hike In Interest Rates
January 27 2022 - 11:44AM
NEWSBTC
The price of bitcoin has dropped after the Federal Reserve said
that it will likely raise interest rates in March. Bitcoin lost its
yesterday’s gain, now trading at $36k at press time. However, Fed
Chairman Jerome Powell stated during a press conference that there
is still a lot of uncertainty, including how many interest rate
hikes will occur in 2022 and how rapidly they would climb. Bitcoin
Loses Gains Following Fed Remarks Bitcoin lost its gains as
investors and traders assessed Fed Chairman Jerome Powell’s
remarks. Furthermore, Powell stated that the central bank
would progressively eliminate economic support as a means of
combating excessive inflation. The Fed is winding down its
asset-purchasing program at the time of this decision. Monetary
stimulus has been a substantial source of market support over the
last year, contributing to the strength of both equities and the
crypto market. The Fed indicated that it would carry out a
previously announced taper of bond purchases and that rates would
be raised “soon.” In recent months, traders’ enthusiasm for
cryptocurrencies has waned due to expectations of higher rates and
less liquidity. That hasn’t dampened Cathie Wood’s ARK Invest’s
optimism, which forecast on Tuesday that Bitcoin’s price will reach
$1 million by 2030. All of this occurs while the central bank tries
to rein in inflation, and some analysts believe the cost-of-living
situation will worsen before it improves. As a result, the Fed
remains committed to closing the money taps and ending the massive
stimulus measures enacted during the coronavirus outbreak. Powell
stated, “This is going to be a year in which we move steadily away
from the very highly accommodative monetary policy we put in place
to deal with the economic effects of the pandemic.” BTC/USD trades
at $36k. Source: TradingView It’s worth noting that when it comes
to boosting interest rates, the Fed will have to strike a balance.
If they rise too quickly, employment levels could be impacted, and
the current economic recovery could be jeopardized. The
announcement elicited a wide range of reactions. BTC is currently
trading at $36,421, down 3.76% on the day and well below the
$38,825 highs witnessed in the days leading up to his statements.
On Thursday, the stock markets also dipped somewhat. Related
article | Go With The FED, Why Bitcoin Could Benefit From Interest
Rate Hikes In 2022 Impact On Bitcoin And Crypto Market Since the
Federal Reserve’s early November meeting, when the central bank
stated that it will begin tapering its bond purchases, eliminating
financial system stimulus, Bitcoin’s price has been under severe
pressure. In November, the cryptocurrency reached a high of about
$69,000. Because of how their appeal reduces when interest rates
rise, rising interest rates are often considered as bad news for
digital assets. Government bonds may be preferred by less cautious
investors since they are less risky. If the change in monetary
policy has a long-term negative influence on the stock market,
major cryptocurrencies like BTC and ETH may suffer as well. Bitcoin
break line is around $30,000, which it successfully defended last
July, and any drop below this psychologically significant price
threshold might have serious consequences. Related article |
Bitcoin Falls To $43k After Fed FOMC Meeting Featured image from
Getty Images, charts from TradingView.com,
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