Bitcoin Pumps to $22k as Fed Hikes Rates by 75 BPS
Bitcoin’s volatility surged once again following the latest Federal Open Markets Committee (FOMC) meeting. The primary cryptocurrency rose by 2.5% in response to the US central bank’s announcement of another 75 basis point hike to its policy rate.
- Trading for only $21,688 at 13:30 EST, Bitcoin quickly pumped to $22,209 at 14:10 EST shortly after the rate hike was announced. As writing time, it trades for $21,905.
- The price move is hardly a first: Bitcoin’s price has gone volatile immediately following numerous FOMC meetings throughout the year. At times, the volatility is short-lived; at others, rate hikes have long-standing effects on the crypto and stock markets.
- Bitcoin has been tightly correlated to stocks throughout the year (though slightly less so in recent months), especially when responding to Federal Reserve policy. The S&P 500 rose by 1.2% while the NASDAQ 100 pumped by 2.5% on the day.
- A sizeable portion of the market began to fear a 100-basis point hike was imminent following the Canadian central bank’s equivalent hike earlier this month. However, most expected a 75-point hike, as indicated by Powell during June’s FOMC press conference.
- The Fed’s effort to raise interest rates is to cool the red-hot inflation that’s been plaguing the country throughout the year. June’s CPI report recorded 9.1%, the highest in 40 years – and well above the Fed’s 2% target.
- However, fears are also circulating that the Fed’s efforts may plunge the economy into a recession. Multiple major crypto firms have already announced mass layoffs in June, citing macroeconomic pressures as the cause.
