Fed Interest Rates And Bitcoin

By RFereru | CryptoStory | 3 Sep 2022

Interest rates effects over Bitcoin

The prices of bitcoin, Ether, and other cryptos fell today, based on expectations the Federal Reserve would increase interest rates by 75 bps. Bitcoin rose over $23,000, following higher headlines from stocks, following a US Federal Reserve rate increase, but it suggested that the rate increase might be slower. Bitcoin prices fell to $17,500 after the Federal Reserves June meeting, where the central bank raised the fed funds rate by a substantial 0.75 percent. Bitcoins price took a dive this morning, falling close to $20,000, after Federal Reserve Chairman Jerome Powell said that the Fed could very well continue to increase interest rates.

Experts said cryptocurrency prices will continue to feel the effects -- increased volatility and falling prices -- as the Federal Reserve further increases interest rates over the next few months. The volatility has occurred amidst uncertainty over the trajectory and size of Fed interest rate increases & their impact on risk assets. While historical data does not neatly indicate how markets will respond going forward, especially for consolidated markets, experts mostly agree investors should expect more volatility in the weeks ahead once the Federal Reserve announces another major rate hike. U.S. Fed Chair Jerome Powell is scheduled to conclude a two-day meeting July 27, with market analysts expecting a nominal 0.75 percent interest rate increase.

Stocks immediately fell and continued their slide Tuesday, following back-to-back losses for two days, after Fed Chair Jerome Powell reiterated the Fed needs to keep fighting high inflation with additional rate increases. The US Federal Reserves recent raft of rate increases has been the most aggressive in decades, and this months meeting comes as investors are trying to understand whether the Feds decisions are already or will be responsible for the downturn, one that could have catastrophic effects on world markets, including cryptocurrencies. Both financial markets and crypto markets are moving higher as a result of the expected news the FOMC plans to increase short-term interest rates 0.75 percent in an attempt to slow runaway inflation. The FOMC raised the federal funds interest rate target by 75 bps, or 0.75%, Wednesday, marking its highest consecutive increase in rates since the 1980s.

With the Fed expected to raise the rate by at least 75 basis points on July 27, the cryptocurrency market capitalization has dropped about 4 percent, with Bitcoin (BTC), Ethereum (ETH) and other crypto assets falling in value over the past 24 hours. Over the weekend on July 23, the Bitcoin (BTC) price fell from above $22,000 to $21,831 as of press time before the increase. Bitcoin prices have plummeted towards $20,000 apiece, a more than 10% decline in the past week, while Ethereum and the other top 10 cryptos have seen double-digit drops too. Ahead of a normal press conference afterward, with the announcement of a rally, Bitcoin prices rose over $22,000, briefly touching $23,000.

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