Bitcoin fluctuated around the $29,000 price level after the Federal Reserve raised interest rates as expected and signaled it’s not finished tightening even with the risk of exacerbating a bank crisis that’s roiled global markets.
(Bloomberg) — Bitcoin fluctuated around the $29,000 price level after the Federal Reserve raised interest rates as expected and signaled it’s not finished tightening even with the risk of exacerbating a bank crisis that’s roiled global markets.
The largest digital currency by market value rose by 1.2% to $28,452 as of 2:16 p.m. in New York, after climbing to as high as $28,913 earlier. The cryptocurrency last traded above $29,000 in June. Bitcoin has rallied about 70% this year. That comes on the back of last year’s 64% decline.
Crypto prices have surged anew in recent weeks amid turmoil in the US and European financials sector, to which three US banks have succumbed and which brought about the takeover of Credit Suisse Group AG by UBS Group AG over the weekend. Digital-asset proponents say that their industry is a beneficiary as investors realize that tokens are out of the reach of governments and are far removed from any of the issues occurring with different lenders, leaving crypto advocates optimistic even with the Fed hiking.
“We think the recent break above $25,000 suggests the market has bottomed out and is getting ready to start the next big leg back toward, and eventually through the record high,” said Joel Kruger, strategist at institutional trading platform LMAX Group. Bitcoin traded at almost $69,000 in November 2021.
The Federal Open Market Committee voted unanimously to increase its target for the federal funds rate to a range of 4.75% to 5%, the highest since September 2007, when rates were at their peak on the eve of the financial crisis. It’s the second straight rise of 25 basis points following a string of aggressive moves starting in March 2022, when rates were near zero.
At the same time, officials warned that “recent developments are likely to result in tighter credit conditions for households and businesses and to weigh on economic activity, hiring, and inflation. The extent of these effects is uncertain.”
While Wednesday’s hike was in line with most economists’ and traders’ expectations, it was one of the central bank’s toughest calls in recent years, with some Fed watchers and investors calling for a pause to mitigate the risk of financial contagion following multiple bank collapses.
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