Bitcoin had been riding the euphoric high from the CPI data released on Tuesday which showed that inflation was finally slowing down in the United States. The digital asset had been able to clear $18,000 for the first time since the FTX collapse as a result of this. However, the FOMC announcement that would follow on Wednesday would shock the market back into its shell, sending bitcoin’s price spiraling downwards once more.
Bitcoin Reels From Announcement
Even though the interest rate hike was not as high as previous ones, it still had some effect on the crypto market. Just after the announcement, bitcoin had rallied to a local peak of $18,300 before starting back down once more. However, the overall outlook toward the FOMC meeting remains positive during this time.
Dmitry Ivanov, CMO at CoinsPaid, notes this positivity has come with the interest rate hike that came out to only 50 basis points (BPS). “The digital currency ecosystem is beaming with positivity with respect to the interest rate hike that saw the US Federal Reserve less aggressive than it has been,” Ivanov told NewsBTC. “Of particular interest to industry stakeholders are the fact that corporate investors will have more money on their balance sheet with a reduced borrowing cost, and this can be invested in alternative assets like Bitcoin.”
BTC price hovering at $17,600 | Source: BTCUSD on TradingView.com
Bitcoin has since returned to the levels where it was trending before the FOMC announcement but this renewed positive outlook in the financial markets has worked to help it maintain its value above $17,600 for the most part.
Will BTC Finish 2022 Weak?
With only two weeks left in the year, there are concerns about how the digital asset will close out in 2022. So far, there has been markedly weak movement in the market, impacted by the high inflation levels as the Fed remains hawkish in its stance to drag inflation to 2% over time.
Ivanov also touches on this in his statements saying “That the Feds tapered their interest rate hikes does not imply that inflation is reduced.” However, the CoinsPaid CMO believes that bitcoin will be able to retain more of its value compared to fiat currencies as more institutional money frees up to possibly go into the crypto market.
If the market maintains its positive outlook, there is a possibility for more growth in the price of bitcoin over time. Ivanov also looks to the end of the year through a more positive lens, predicting a 4.5% increase for the digital asset. “As it stands, Bitcoin is poised to overcome the latest negative slip and benefit from this latest Fed move, and we can see the price surge beyond $18,500 by the end of the year.”
Featured image from Medium, chart from TradingView.com