Bitcoin and the rest of the cryptocurrency market were in a festive mood in response to the interest rate hike by the US Federal Reserve, which sent both Bitcoin and Ethereum prices higher.
The Federal Reserve’s announcement sent the price of Bitcoin up 5%. As of this writing, Bitcoin is trading at $22,837, up 7 percent in the last 24 hours. More than that, the price of Ethereum also increased by 11.6%; Up to $1,550, data from Coingecko, Thursday.
In fact, the entire crypto market is enjoying a positive outlook as the total cryptocurrency market cap is $1 trillion.
Bitcoin fell last week as its price fell below $21,000. But with the latest Fed rate hike of 0.75%, the price of BTC has risen once again.
The Fed fights inflation as it raises interest rates
The Federal Reserve is trying to protect inflation with a 0.75% increase. The central bank’s move on raising interest rates is said to be in the country’s interest, especially since the US Bureau of Labor Statistics recently revealed to the public that the CPI, or inflation rate, was 9.1% in June, which is 40 years ago. high.
The Fed’s continuing interest rate hikes have sent a negative message that the country may be in danger of a recession.
Triggered a domino effect. After the Fed raised the interest rate, US interest rates also rose in the 2.25% and 2.5% range which is at extreme levels since the COVID-19 pandemic started. The US central bank recently disclosed this development at the Federal Open Market Committee held on Wednesday.
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Poll: 96% of Americans are concerned about inflation
The Federal Reserve has been trying to rein in higher rates while raising interest rates for the longest time. The US Bureau of Labor Statistics revealed that the biggest factors that increase the rate of inflation are the rise in the prices of shelter, gasoline and food.
Reportedly, a CNBC poll revealed that about 96% of Americans are particularly concerned or worried recently about increased gas, shelter and food prices.
To beat inflation, the Federal Reserve has the option of restricting the money supply. Therefore, it resorts to raising interest rates which actually makes the loans very expensive. A rate hike of 0.75% was expected although it was earlier thought that the central bank might raise the interest rate by 1% when inflation was weak in June.
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Frequent price hikes and hikes in interest rates have alarmed citizens as the risk of a recession continues to mount. It has increased the levels of uncertainty in the global markets especially because a recession is likely to happen after two consecutive drops of quarterly GDP.
GDP as presented by the Bureau of Economic Analysis showed that the economy contracted by 1.6% as shown in the first fiscal quarter and economists are concerned that a decline may also occur in the second quarter.
Q2 GDP numbers will be released tomorrow. The White House has already prepared the public for this important announcement with an interview transcript and a blog post by Janet Yellen, the Treasury secretary who has set indices that two consecutive quarters are not indicative of a recession.
What’s more, US President Biden has given assurances of some sort that the country will not face a recession.
Crypto total market cap at $1.02 trillion on the daily chart | Source: TradingView.com
Featured image from Euronews, chart from TradingView.com