April 17, 2024

Bitcoin Recovers to $40k Amid Fed Rate Hike

Bitcoin has shown resilience in the intraday market, surging by 6% to hit the $40k mark for the first time in weeks. The recovery comes during the Fed rate hike, which was also slightly responsible for the flagship coin’s slump to $39.5k recorded a few hours ago.  

For weeks, the crypto market has been dominated by the nervousness of traders and investors due to the announcement of interest rate hikes by the Federal Reserve in early January. The Agency revealed it would raise the rate thrice from March to combat the rising costs of goods and services. Today, the Fed raised the interest rate by 50 basis points, and unsurprisingly the news impacted the bullishness of the coin, similar to the occurrence in March.

Based on CoinMarketCap’s 24-hour data, BTC intraday trading has been up by 2.46% even though it retraced to $39.5k before the new price. Crypto analytical website Santiment explains that the crypto market could yet again have another sell the rumor and buy the news scenario because of the surge. When there’s a rate hike, bearishness sets in, regardless of the brief gains.

Santiment Sheds More Light on the Hike

Santiment points out that BTC wasn’t the only thing affected by the expected announcement. S&P 500 and Gold also broke out. BTC and the crypto market in general, always move in tandem with the S&P 500. So, the simultaneous gains don’t come as a surprise.

A Director at Trade The Chain, Nick Mancini, thinks the hike won’t have a long-lasting bearishness on BTC because the interest wasn’t raised by 0.75%. Based on his analysis, if the Federal Open Market committee increases the rate by no more than 0.5%, the crypto and the equities market would turn bullish. 

He assumes that the FOMC will restrict the hike to no more than 0.5% for 2022. It will spark bullishness in the various price actions of the coins. 

Fed Maintains a 2% Target Mark to Tame Rising Costs

Economic experts predict the Fed Reserve to continue rolling out interest rates until it meets its 2% target. Based on CPI, U.S. inflation surged by 8.5% YoY in March, last witnessed in 1981.

Famous economist Michael Van de Poppe is optimistic that the flagship coin will make another big move soon that could result in a long bullish run based on the current scenario. 

“If BTC sustains the momentum at $40,600, it will maintain an upward movement, which could surpass $42,600. If it breaks that mark, it may potentially rise to $46k if its market forces do not affect it.

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