The Fed moves towards a rate hike, and Bitcoin falls

The announcement by the Federal Reserve (Fed) that foresees an increase in interest rates by the end of 2023 could not fail to have repercussions also on Bitcoin . Yesterday, not surprisingly, Bitcoin has definitively abandoned the threshold of 40,000 dollars, where it had returned in recent days, returning to 37,500 dollars. The loss is currently limited and equal to 2.7%.

In practice, Bitcoin investors also seem worried about the Fed’s decision. In fact, accommodative policies could soon end, with interest rates stagnating between 0 and 0.25%. But above all, the financial stimulus could end, that is, the purchase of securities, a practice known as quantitative easing. The so-called tapering would be put in place , that is the progressive decrease of these purchases. But this, President Jerome Powell said, is still premature. In short, it will take time.

However, the Fed also expects growth in the US economy, with + 7% of GDP in 2021, + 3.3% in 2022 and + 2.4% in 2023. As for inflation, this is also expected. increasing. Indeed, Powell anticipated that it could be even higher than expected.

Either way, the Fed will intervene if necessary.

Bitcoin’s reaction to the Fed’s decisions

As mentioned, Bitcoin, in line with the general market trend, experienced a slight decline after the Fed’s communications. 

However, analysts’ forecasts remain optimistic. In fact, according to many, it will be inflation that will do well to Bitcoin, which will increasingly be characterized as a safe haven asset. 

Beyond this, a suggestive hypothesis is circulating in these hours that has little to do with the Fed (proving that Bitcoin is other than traditional finance). According to Forbes , a short squeeze could take place on Bitcoin , the same happened on Gamestop . The hypothesis is that there may be a sudden increase in the price that can put those who are using leverage in a short position in difficulty.

It is certain that the periods of lateralization such as the current one are then followed by turbulent movements: on the upside they could lead Bitcoin to exceed 40,000 dollars in momentum. On the downside, they could bring it back to 30,000. All that remains is to wait for the evolution of the market.

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