The US key interest rate rises by 75 points and the Bitcoin price grows to 22,000 US dollars. Although interest rate increases have caused strong losses on the crypto market several times recently, it is now largely writing green numbers.
FED raises key interest rate by another 0.75 percent
In March, the US Central Bank raised the key interest rate by 0.25 percent, followed by an increase of 0.50 percent in May. The crypto market and with it the Bitcoin also crashed noticeably. BTC dropped from just under $40,000 to the $30,000 mark.
Most recently, Bitcoin even fell to $ 20,000. Many cryptocurrencies had to accept enormous losses at the same time.
The FOMC, as an institution of the US Central Bank, ends the current monthly meeting today, in which the handling of the key interest rate is discussed. It is already known that the key interest rate is rising by another 0.75 percent.
As a result, the FED is raising the key interest rate more than it has not done in 28 years. This year, the combined rate increase is 1.5 percent. According to Truflation, inflation in the US is 10.84 percent.
US year-on-year inflation rate
Jerome Powell, chairman of the FED, does not consider an increase in the key rate to this extent to be the norm, but in the current situation it is necessary.
Today’s increase of 75 basis points is, of course, unusually high, and I do not expect such steps to become the norm.
According to his assessment, there will be a further interest rate increase of 0.50 to 0.75 percent in July. However, he could not give a guarantee, since the FOMC makes every decision at the individual monthly meetings.
Is Bitcoin and the crypto market already in the recovery phase?
Due to the turnaround in interest rates, which is taking place not only in the US, but also in the EU, some experts assume a long-lasting bear market that will last until 2024. In fact, this assessment is not rare.
Jesse Powell, founder of the crypto exchange Kraken, announced this opinion in May, while analyst Gareth Soloway published a similar assessment back in January. Huobi co-founder Du Jun joined in February. He also believes in a bear market by 2024.
BTC: 24-hour trend
In the last seven days alone, Bitcoin has lost 28.25 percent. Although the FED is now raising the key interest rate particularly sharply, the downtrend of the Bitcoin and crypto market is ending.
This fact suggests that a new soil has now been formed. While Bitcoin dropped to up to $ 20,000 yesterday, it reaches a value of up to $ 22,800 in the morning hours.
The heatmap makes it clear: many cryptocurrencies are recovering from recent price losses. Source: Coin360
Not only Bitcoin, but also a large number of other cryptocurrencies are already in recovery. Among the top 100 cryptos, only very small losses can be sustained in the 24–hour trend for two cryptos – XDC and LEO. An upward trend is already visible there, too.
How long should the current FED interest rate policy last?
in 2020, the FED launched a zero interest rate policy, which ended only this year. The current turnaround in interest rates is reportedly expected to continue until 2024. This assumption supports the thesis of a bull market starting in 2024.
BREAKING: The biggest rate increase since 1994 from the FED.
However, expectations from FED policymakers are that they’ll be starting to cut rates in 2024.
– Michaël van de Poppe (@CryptoMichNL) June 15, 2022
The expectation of FED policymakers is that they will start cutting interest rates in 2024.
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