Bitcoin’s price trends seem to follow the US Federal Reserve set rates. BTC plunged shortly after the Federal Reserve’s July meeting. According to the minutes, however, policymakers discussed increasing inflation-fighting interest rates in the August 17 meeting.
They deliberated on the need for checkmate borrowing costs by increasing rates which could restrict the country’s economic growth. This would allow them to have sufficient time and power to manage inflation.
It’s not surprising to see the recent performance of cryptocurrency following the news of the Fed’s plans. Such changes are quite difficult on assets. As a result, crypto values saw a halving in March as the central banks tightened their lending cycle.
BTC price data showedA drop of around 2%. This decline was less than its peak performance of July 15, and July 26, respectively. Deliberations on various platforms are high about possible selling after the BTC bears made a dramatic entrance.
Due to US restrictions and a possible increase in interest rates, the crypto market is now more susceptible. There could also be volatility that causes confusion for the crypto market.
The move also affects the market prices and anticipates more interest rate cuts in 2023. BTC prices had also risen dramatically to reach a high of over $25,200 in two months.
Reactions to Fed and Spike in Bitcoin Interest Rates
Lewis Harland of Decentral Park Capital pointed out that Bitcoin’s rates can negatively affect it. The Fed manages inflation in spite of economic costs shrinking, he said.
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.
It was expected that the rate would stagnate until 2023 after it reached around 3.7% at its peak in March. The central bank raised the rate by 75 basis point last month. Now, it is between 2.25% and 2.5%
Today, Bitcoin’s price is slowly recovering as it hovers at $23,500 as opposed to its Wednesday low of $23,180. Although the gain is small, BTC’s value remains below its supportive levels during its ascending trendline.
The Fed minutes have generated reactions from many observers. For example, a former Fed trader, Joseph Wang, declared that it’s hawkish.
His observation also raises concern about excessive tightening in managing inflation. However, the policymakers advised that normalcy be created by slowing down the rate at specific levels.
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