Bitcoin prices rose to $22.5 thousand following the Federal Reserve’s decision to increase interest rates by 75 basis points on June 15, marking the largest raise in 28 years as the central bank aims to tackle the highest inflation rates seen in over four decades.
According to data from Cointelegraph Markets Pro and TradingView, the cryptocurrency market, including Bitcoin, faced downward pressure in early June 15 trading hours due to rumors circulating about the potential collapse of Three Arrows Capital (3AC) amid the ongoing Celsius issue.
After Federal Reserve Chair Jerome Powell announced the 75 basis point hike, Bitcoin’s price briefly surged to $22,520 before retracting to $21,500. Similarly, altcoins experienced a short price boost as fears of a 100 basis point hike did not materialize, meeting market expectations at the Federal Open Market Committee (FOMC) meeting.
Traditional markets responded positively to the news, with the S&P 500, Dow, and NASDAQ trading in the green for the day. Analysts, however, advise vigilance to observe market behavior at the day’s close and the opening bell on the following day.
In response to the rate hike announcement, analysts projected that the Federal Reserve would likely commence rate cuts in 2024. The rate increase was primarily driven by high inflation, with the latest Consumer Price Index (CPI) data showing a year-over-year 8.6% surge, surpassing analysts’ predictions.
Some analysts speculate that the substantial rate hike is an attempt by the Federal Reserve to proactively anticipate economic conditions and allow flexibility to potentially halt future hikes if the economic situation deteriorates.
The crypto market seems to have factored in the anticipated rate hike, as prices remained relatively stable post-announcement. Presently, cryptocurrency-related developments are the focal point in the sector, with the total market cap standing at $931 billion and Bitcoin’s dominance rate at 44.5%.
Disclaimer: The opinions expressed are of the author and not Cointelegraph.com. Investing and trading involve risks, so it’s advisable to conduct thorough research before making decisions.
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