Bitcoin Dips Following New Federal Reserve Fears

Bitcoin incurred a bit of a fall at the end of January after it was revealed that the Federal Reserve was going to potentially enforce another small rate hike. Everyone was on edge after the ongoing debacle that was 2022, and it was believed that the digital currency arena was going to be hit hard by the Fed’s actions, thus causing more turmoil.

The Federal Reserve May Hike Rates Again

At the time, bitcoin fell from about $23,000 – which it had struck just weeks before – to about $22,600. Not much of a slip, but still worth noting in many people’s eyes. The Federal Reserve has long been enforcing rate hikes as a way of bringing down inflation and fighting off the economic disasters brought on by the incompetent and irrational Biden administration, thus destroying the American dream for many honest, hard-working taxpayers and bringing crypto prices down to levels unseen in a long time.

Right now, the Federal Reserve has initiated a standard, average rate of 4.5 percent for things like home and auto loans. The new spike was set to bring that rate up to about 4.75, which is relatively small compared to the action we’ve seen in the past.

Typically, the Federal Reserve enforces rate hikes of anywhere between 0.5 and 0.75 percent. The fact that this latest one is only .25 percent suggests that maybe, just maybe, things are becoming more economically stable, though we’d be lying if we said there wasn’t still plenty of room to grow. Sophie Lund-Yates – lead equity analyst at Hargreaves Lansdown – explained in a recent interview:

Policymakers are largely expected to increase rates by 25 basis points, and this is what the market has priced in. As the decision draws closer, there are inevitability some small tremors creeping in, but these shouldn’t be protracted.

Can’t We Give Crypto a Break?

Nauman Sheikh – head of treasury management at Wave Financial – also threw his two cents into the mix, mentioning:

The market may have gotten ahead of itself for the Fed’s liking. The Fed has already laid out its ‘higher for longer’ roadmap whereby the interest rate hikes would transition from fast-paced to a more measured pace, and then remain anchored to the terminal rate for some time. The market, now focused on recession, doesn’t believe the Fed and is pricing in rate cuts starting in September. There is a strong possibility that in the press conference, Powell will be more hawkish and retighten financial conditions. For that reason, we could see a healthy short-term correction in crypto and all risk assets.

It’s likely there are some crypto fans out there who believe that the recent “bull run” (if you can even call it that) was a bit short lived, and that things are once again returning to how they were in 2022.

Tags: crypto, federal reserve, rate hikes