Bitcoin and the rest of the crypto market have been in a festive mood in response to the U.S. Federal Reserve’s interest rate hike, sending both Bitcoin and Ethereum climbing in prices.
The Fed’s announcement has sent Bitcoin’s price up by 5%. Bitcoin trades at $22,837 as of writing. This is a 7 percent increase in 24 hours. More so, Ethereum’s price also spiked by 11.6%; hitting $1,550, data from Coingecko show, Thursday.
With the crypto market totaling $1 trillion, it is actually a very positive market.
Bitcoin fell last week as its price dropped below $21,000. But, with Fed’s latest 0.75% rate bump, the BTC price has skyrocketed once again.
Fed Fights Inflation with Interest Rate Increases
With a rate hike of 0.75%, the Federal Reserve tries to contain inflation. The central bank’s move on the rate hike is said to be in the country’s best interest especially since the U.S. Bureau of Labor Statistics recently broke it to the public that the Consumer Price Index or inflation rate is at 9.1% in June, a 40-year high.
The Fed’s continuing rate hikes have sent the negative message that the country could be in danger of a recession.
This caused a chain reaction. Following the Fed’s rate hike, the U.S. interest rates have also spiked at a range of 2.25% and 2.5% which is at extreme levels since the COVID-19 pandemic started. At Wednesday’s Federal Open Market Committee, the U.S. central banks revealed these developments.
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Study: 96% of Americans Are Concerned About Inflation
Since the beginning, the Fed has tried to curb high inflation rates by raising interest rates. The U.S. Bureau of Labor Statistics revealed that shelter, gasoline and rising food prices are the major factors in the rise of inflation.
CNBC reported that 96% Americans were worried or particularly concerned about recent gas and shelter price increases.
The Fed can limit the money supply to combat inflation. The Fed decides to raise interest rates, which makes loans more expensive. It was not unexpected that the central bank would increase its interest rate by 0.75%, although some rumors had suggested earlier that it might raise rates by 1% if inflation fell in June.
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As the threat of recession increases, citizens are fearful because they have been subject to recurring rises in interest rates and high prices. This has increased uncertainty on global markets, especially since a recession is most likely to occur after two consecutive quarterly drops in GDP.
According to Bureau of Economic Analysis’s GDP report, 1.6% of the economy was lost in the first quarter. Experts worry that another decline could be possible for the second.
Tomorrow will see the release of GDP Q2 figures. This important announcement will be made by the White House with a transcript interview of Janet Yellen and a blog posting. Janet Yellen has proven that two quarters consecutively is not an indication of recession.
Even more, President Biden assured that there will not be a recession in the United States.
Crypto market cap is at $1.02 trillion according to the daily chart. Source: TradingView.com| Source: TradingView.com
Featured image taken from Euronews. Chart taken from TradingView.com