Will the Fed rate hike crash Bitcoin prices?

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The Bitcoin (BTC/USD) price has gone nowhere in the past few days as investors wait for the upcoming Fed interest rate decision. It is trading at 39,320, where it has been throughout the week. This price is significantly lower than its all-time high.

Fed decision ahead

The Federal Reserve is the most important entity globally because of its ability to print currency and tweak interest rates.

In 2020, the bank embraced its most expansionary monetary policy framework on record in a bid to protect the American economy.

It decided to lower interest rates to the lowest level on record and then decided to expand its balance sheet through the quantitative easing (QE) program. As a result, the bank’s balance sheet has risen to over $9 trillion.

The impact of this policy was best seen in the financial market as high-risk assets rose. High-growth technology stocks surged to the highest level on record. The same was true for cryptocurrencies like Bitcoin and Ethereum.

Recently, however, the Bitcoin price has crashed by over 40% as the Fed started to unwind its policy. It has already slowed its asset purchases.

The Fed will now conclude its monetary policy meetinf on Wednesday. Analysts expect that the bank will deliver a 25 basis hike. Some believe that it will actually hike rates by 0.50% in a bid to slow the rising inflation.

The biggest question is whether Fed rate hikes will crash Bitcoin price further. Some analysts believe that it is a difficult battle to fight the Fed and that BTC and other risky assets will remain under pressure.

On the other hand, some analysts expect that Bitcoin will actually start its recovery path after rate hikes because the situation has already been priced in by the market. Besides, everyone knows that the Fed will hike rates.

Bitcoin price prediction

bitcoin price

The four-hour chart shows that the BTC price has been in a narrow range in the past few days. It is trading at 39,115, where it has been in the past few days. As a result, the price is oscillating at the 25-day and 50-day moving averages. The MACD is also at a neutral level.

Therefore, there is a likelihood that the Bitcoin price will initially drop after the rate hike and then resume the bullish trend.

The post Will the Fed rate hike crash Bitcoin prices? appeared first on Invezz.

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