- Analysts remain uncertain if BTC will surge or plunge in the coming weeks.
- The price of BTC dropped below $18,000 as the Fed announced a long-anticipated 50 bps interest rate hike.
The US Federal Open Market Committee (FOMC) during its meeting that commenced Dec. 14 revealed the implementation of a 50 basis points (bps) interest rate hike. The price of Bitcoin (BTC) plunged shortly after the announcement, leaving observers uncertain of its next price direction.
Bitcoin surged to a one-month high of around $18,300 prior to the announcement. However, the price of the benchmark crypto has fallen 0.76 percent in the last 24 hours to currently be trading at around $17,660.
Various analysts weighed in on the price action so far. Scott Melker, the host of the WOAS Podcast, stated that the price plunge across markets is only the first reaction to the news. Based on this, he notes that it could be wrong.
The first reaction is usually the wrong one. https://t.co/lvntqLtyOL
— The Wolf Of All Streets (@scottmelker) December 14, 2022
Meanwhile, Michaël van de Poppe, the COE of crypto trading firm Eight, remarked that the current price action shows a sign of strength for BTC. This is especially as BTC fell from $20k to $15.6k due to the FTX collapse and has since regained $18k, a price level slightly higher than the low in June.
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“The markets fell from $20K to $15.6K due to the FTX collapse. We’re currently trading at $18K, slightly higher than the low in June. I understand the bearish thesis, but this is honestly a sign of strength for Bitcoin,” he told his over 643k Twitter followers.
Will BTC eventually shake off the bearish impact of interest rate hikes?
Meanwhile, the latest BTC price plunge is not the first time the crypto market has slumped following a Fed monetary policy adjustment. According to a Time report in November, the Fed’s four other interest rate adjustments were also followed by drops in the price of BTC.
The 0.25 percent hike in March, as well as three other 0.75 percent hikes so far in 2022, have all been followed by BTC price drops. Per the report, BTC is still considered a risk asset as it has been moving in near unison with the stock market.
Based on this, aggressive rate hikes will likely continue to make the market choppy in the short term. Joshua Fernando, CEO of eCarbon and a crypto expert, asserted that this trend will likely continue into 2023.
If the Fed signals strong rate hikes through 2023, expect more pain in the markets, Fernando said.
Regardless, market participants’ expectations of bullishness in the run-up to the rate hike announcement have still been actualized.
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