Bitcoin price soar following the U.S. central bank rate hike
Bitcoin price is on its way to $40,000. The price increase offset a brief selling period shortly after the US Federal Reserve raised its policy interest rate by half a percentage point, the biggest increase since 2000. At the time of writing, BTC is changing hands at $39,670.
BTC/USD 4-hour chart | Source: TradingView
Bitcoin price rises after Fed raises rates; growth concerns ease
The Fed also approved plans to reduce its bond portfolio, which will ease the monetary stimulus that has contributed to the rise in speculative assets, including stocks and cryptos. The Federal Open Market Committee, which sets interest rates, stated that ongoing rate increases within the target range would be appropriate, suggesting another hike could occur at the Fed’s meeting next month, albeit likely below 0.75 percentage points as some traders expected.
“The Fed made their move as expected today, with a 50 basis point interest rate rise. Unsurprisingly, the impact shifted bullish almost immediately for crypto, just as it did after the March hike. We may have another sell the rumor buy the news scenario”, Santiment reported.
Rising rates typically precede slowing economic growth, weighing on asset prices. Still, during a press conference on Wednesday, Fed chair Jerome Powell stated that the U.S. economy remains strong and could handle rising interest rates.
🇺🇸 *FED RAISES RATES 50 BPS, TO START RUNOFF JUNE 1 AT $47.5B/MTH
*FED EXPECTS `ONGOING’ INCREASES IN RATES WILL BE APPROPRIATE
*FED: RUNOFF PACE TO RISE TO MAXIMUM $95B/MTH AFTER THREE MONTHS
— Christophe Barraud🛢🐳 (@C_Barraud) May 4, 2022
The Bitcoin Fear & Greed Index ticked lower into “Fear” territory, indicating a lower appetite for risk among crypto traders. The index has remained in “Fear” territory over the past few months, marking a decisive shift in “extreme greed” sentiment in November of last year.
An increase in trader sentiment would require a rise in BTC’s price, with a gradual increase in trading volume and volatility. Generally, high buying volumes in a positive market daily indicate bullish activity.
Ether, the second-largest crypto by market cap, was changing hands over $2,930, a 6% gain. Other significant cryptos were even more green, with ADA and AVAX rising over 16% and 11%, respectively, and SOL jumping 8%.
The overall cryptocurrency market cap stands at $1.805 trillion, and Bitcoin’s dominance rate is 41.8%.
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