The US Federal Reserve hiked interest rates by 0.75 percent on Thursday, the largest hike in three decades. However, the central bank has indicated that more hikes are due later this year.
Bitcoin fluctuated significantly after the Fed announced a rate hike in a desperate attempt to counter rising inflation. The action represents another record-breaking rate hike and sends BTC price into turmoil.
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 hitting $21,222 around 17:55 UTC, BTC fell to $20,069.
Bitcoin volatility after Fed surge
According to analysts, Bitcoin faces volatility when the central bank announces interest rate decisions. However, the real effects of the disclosure are usually not noticed until a few days later.
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Powell says the job market is too tight and inflation is too high. Image: Justin Lane/EPA.
Cryptocurrency markets are still heavily influenced by macro sentiment, according to Noel Acheson, Head of Insights at Genesis Trading, quoted by Yahoo Finance.
Acheson said the recovery rally is welcome given recent events in the cryptocurrency market.
The Fed announced a 0.5% rate hike last month, the largest hike in 22 years. There was a temporary surge in bitcoin after the disclosure, but it fell along with the stock market in the days that followed.
On the other hand, this increase could be just the opposite. Given last Friday’s CPI read of 8.6%, some believe markets have already hiked the rate.
The total crypto market cap on the daily chart is $937 billion. Source: TradingView.com
Powell says inflation is too high
The bitcoin and cryptocurrency markets have taken a major hit over the past few weeks as investors sold off riskier assets.
Federal Reserve Chair Jerome Powell said at a news conference after announcing the decision on Wednesday 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 possible 100 basis point rate hike failed to materialize and the market originally anticipated from the June 15 Federal Open Market Committee (FOMC) meeting, the altcoin market also saw a modest price increase. .
The digital asset market is closely related to the stock markets. Today, Bitcoin followed the stock market as it did this year: the S&P 500 and the Dow Jones Industrial Average both plunged into the news before recovering.
Featured image of Kryptor Trust, chart from TradingView.com