- The Fed is ready to raise rates today.
- Despite the announcement, Bitcoin has soared beyond the $40k mark.
- Bitcoin is up more than 4% in the last 24 hours.
Bitcoin exceeded $40,000 after a torrid week that left bulls scratching their heads. The most recent move comes amid reports that rate hikes were in the works.
The Fed released a statement where the regulators expressed their determination to raise rates in order to keep inflation in check. The latest data from the Labor Department report showed that inflation was at 7.9%, quite a distance from the 2% targeted by the Fed. The statement read, “With inflation well above 2 percent and a strong labor market, we expect it will be appropriate to raise the target range for the federal funds rate at our meeting later this month.”
Investors and traders tend to keep an eye on inflation and Fed policies as they can shape the markets. The same is true for crypto investors, especially those invested in Bitcoin, considering the belief in certain circles that the asset is an inflationary hedge. It should be noted that the crypto market has been experiencing a “winter,” with the Fed becoming more hawkish in November.
However, many pundits believe that the Fed’s sentiment has long been factored in by traders. It is believed that the next point of focus will be the outcome of the Federal Open Market Committee (FOMC) today. At the time, Bitcoin appeared to have proved this analysis right by pushing past the $40k price point moments after the news was released, representing a 3.8% jump.
While the crypto market tanked initially in response to the news of Russia’s incursion into Ukraine, there has now been an increase in demand for the asset class as a result. While Bitcoin spiked, the rest of the crypto market seemed unnerved. As LUNA continues its impressive quarter, Ethereum appears to be closing in on the $3k price point.
The Fed in their statement revealed that “the near-term effects on the U.S. economy of the invasion of Ukraine, the ongoing war, the sanctions, and of events to come, remain highly uncertain. Making appropriate monetary policy in this environment requires a recognition that the economy evolves in unexpected ways. We will need to be nimble in responding to incoming data and the evolving outlook.”
According to CoinMarketCap, Bitcoin has had an impressive week, with the asset up more than 4% in the last 24 hours. In a tweet, Michael Saylor said, “Wars create inflation, cripple commerce, and make Bitcoin compelling,” and the increasing usage in the face of the conflict adds a measure of validity to his statement.
According to Rekt Capital, a crypto trader, and analyst, the new break could see the asset rise as high as $45K. The analyst also noted that a sustained break above the 50 weekly EMA could see the beginning of a substantial bull run. Morgan Stanley, in a report at the end of January, predicted that a break above the $45k price point may signal the end of the 3 month-long price correction.