Bitcoin holds steady as the Fed hikes interest rates again

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Bitcoin and the rest of the cryptocurrency market remained stable after the US Federal Reserve announced that the central bank raised interest rates by 25 basis points.

The move, which is in line with market expectations, raises rates from 4.5% to 4.75%, the highest federal funds rate in decades. The Fed began aggressively raising rates last year in an effort to rein in record inflation, which negatively impacted the value of stocks, stocks, and cryptoassets.

Bitcoin, the largest cryptocurrency by market capitalization, was trading at the time of writing for $23,029, an increase of 0.3% over the past hour, according to CoinGecko. It is now down 66.4% from its all-time high of $69,044.

Ethereum, the second-largest digital asset, rose by the same amount, trading hands for $1,577. ETH is down 67.6% from its high of $4,878.

Both assets have risen over the past week in Bitcoin by nearly 2%; Ethereum by 1.3%.

CoinShares head of research James Butterfill told Decrypt that the Federal Reserve’s statement didn’t add anything new to really move the markets. Federal Reserve Chairman Jerome Powell tried to express his ferocity by saying that the job isn’t done, but the markets aren’t buying it, he added.

But the US stock market, which digital assets have followed this year and last, fell and then surged on the news: at the time of writing, the S&P500 gained 0.2%, while the Nasdaq increased by 0.2%.

White Lion Capital co-founder John Nance told Decrypt that the big question on everyone’s mind is: is the fund for risky assets?

When it comes to Fed monetary policy, the troughs and peaks of previous market cycles have come before/after the peak/trough in rates, he said.

Bitcoin has generally followed the stock market as it is a risky asset. This means that its price can be volatile, just like stocks. Investors sold risky assets as the Fed raised interest rates to tame 40-year high inflation.

Indeed, when interest rates are high, investors prefer safe havens such as gold or the US dollar.

And today the Fed said it would continue to raise interest rates, but not as aggressively as last year, when it raised interest rates by 75 basis points four times.

The Committee anticipates that continued increases in the target range will be appropriate to achieve a monetary policy stance tight enough to bring inflation down to 2% over time, the Federal Reserve said in a statement.

Inflation remains too high, Powell said at a press conference on Wednesday. The work is not yet finished.

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