Will Bitcoin Pump or Dump This Coming Weekend? FED slows rate hike to 50 BPS
- Analysts are still uncertain whether BTC will rise or plunge in the coming weeks.
- The price of BTC fell below $18,000 when the Fed announced a long-expected 50 bps interest rate hike.
The US Federal Open Market Committee (FOMC) revealed during its meeting that started on December 14 the implementation of a 50 basis point (bps) interest rate hike. The price of Bitcoin (BTC) plunged shortly after the announcement, leaving observers unsure of the next price direction.
Bitcoin rose to a one-month high of around $18,300 before the announcement. However, the price of the benchmark crypto has fallen 0.76 percent in the last 24 hours and is currently trading at around $17,660.
Various analysts weighed in on the price action so far. Scott Melker, host of the WOAS Podcast, stated that the price drop across markets is just the initial reaction to the news. Based on this, he notes that there may be a mistake.
The first reaction is usually wrong.
— The Wolf Of All Streets (@scottmelker) 14 December 2022
Meanwhile, Michaël van de Poppe, COE of crypto trading firm Eight, noted that the current price action shows a sign of strength for BTC. This is especially so as BTC fell from $20k to $15.6k due to the FTX collapse and has since regained $18k, a price level slightly higher than the June low.
“The markets fell from $20K to $15.6K due to the FTX collapse. We are currently trading at $18K, slightly higher than the June low. I understand the bearish thesis, but this is honestly a sign of strength for Bitcoin,” he said to his over 643,000 Twitter followers.
Will BTC finally shake off the bearish effect of interest rate hikes?
Meanwhile, the latest BTC price drop is not the first time the crypto market has fallen following a Fed monetary policy adjustment. According to a Time report in November, the Fed’s four other interest rate adjustments were also followed by falls in the price of BTC.
The 0.25 percent increase in March, as well as three other 0.75 percent increases so far in 2022, have all been followed by BTC price falls. According to the report, BTC is still considered a risky asset since it has moved almost in unison with the stock market.
Based on this, aggressive interest rate hikes are likely to continue to make the market choppy in the near term. Joshua Fernando, CEO of eCarbon and a crypto expert, claimed that this trend is likely to continue into 2023.
If the Fed signals strong rate hikes through 2023, expect more pain in the markets, Fernando said.
In any case, the market participants’ expectations of bullishness in the run-up to the announcement of an interest rate increase have still been actualized.
