Late July saw bitcoin rise above the $23,000 mark for the first time in over a week. The world’s number one digital currency saw itself spike after the Fed decided to push rates another 75 points.
Bitcoin Spikes Following Rate Hikes
The behavior is just more proof that bitcoin is very unpredictable, as up to this point, ongoing rate hikes have often been the leading culprit behind the bitcoin dips we’ve been witnessing in recent weeks. Bitcoin has been on something of a downward trend since November of last year. The asset was trading at a new all-time high of approximately $68,000 per unit about nine months ago, though since then, the currency has had trouble maintaining a $20K price, meaning the asset has lost more than 70 percent of its value and it’s unclear when – or even if – things are going to recover.
Now, the digital currency appears to be on something of a bullish ride, with the asset spiking about $3,000 in the past few days, though this jump followed news that the Fed pushed rates higher again. This has gone on repeatedly as a means of combating inflation, which is now at a record 9.1 percent in the United States alone. This means inflation is at a new 40-year high, and food and gas prices continue to move beyond the clouds. Things have never been this bad, yet bitcoin seemed to jump rather than fall further.
Many analysts and industry heads have taken note of the other Fed rate hikes that have occurred in recent weeks. Many say these rate hikes are what caused bitcoin to fall in the first place. They also claim the world’s number one digital asset failed the hedge tool test many others claimed it was completely prone to passing.
As a means of combating growing prices, the Fed has consistently pushed rates higher and each time, bitcoin has suffered somewhat, though this time around, things are a little different. Antoni Trenchev – co-founder of the cryptocurrency wallet system Nexo – explained in a recent interview:
The conclusion of Wednesday’s Fed meeting opens up a summer window for a bitcoin relief rally given we now have two months until policymakers next deliberate on monetary policy. The next 24 hours will be a true test of bitcoin’s re-discovered resilience after it shrugged its shoulders at this month’s stellar U.S. inflation data and didn’t wince when Tesla announced it had sold most of its BTC (bitcoin) holdings.
Other Incidents Within the Crypto Space
For the most part, one can’t fully blame inflation for the downfall that bitcoin has been experiencing. There have been many incidents within the digital currency space that have occurred that have ultimately worked against the asset.
A recent one included the liquidation of crypto hedge fund Three Arrows Capital.
Source: https://www.livebitcoinnews.com/late-july-rate-hikes-caused-bitcoin-to-jump/