Bitcoin, Ethereum Struggle a Day After Fed's Record Rate Hike as Analysts Hope for a Bounce
The bitcoin (BTC) and broader crypto market failed to recover higher and returned to the selloff on Thursday, after a brief rally following the US Federal Reserve’s (Fed) announcement on Wednesday that it had raised rates by 75 basis points, its largest rate hike since 1994.
At 14:48 UTC, bitcoin stood at USD 21,000, down over 1% for the past 24 hours and 31% for the past 7 days. At the same time, ethereum (ETH) was almost unchanged in a day and down 39% for the week to USD 1,105.
BTC past 14 days:
The losses on Thursday came after a brief relief rally in both BTC and ETH Wednesday, as market participants digested a largely expected 75-point rate hike from the Fed.
From a low of USD 20,111 on Wednesday morning UTC time, BTC rose more than 12% to reach close to USD 23,000 before once again giving back most of the gains. A similar story also played out in the ETH market, with the token climbing from a low of USD 1,014 in the morning to more than USD 1,250 shortly after Fed Chair Jerome Powell had wrapped up his press conference – a rally of more than 20%.
According to Mikkel Morch, Executive Director at crypto hedge fund ARK36, the old mantra of ‘don’t fight the Fed’ has never been more relevant than in recent days, with fears about rate hikes largely responsible for driving down crypto prices.
Still, Morch noted that it appears that last week’s high inflation reading for May in the US, combined with recent comments from the Fed, had already spooked investors so much that the 75-basis point hike was largely priced in by the time it was announced.
“It now appears that we can expect the bitcoin price to hold the USD 20K level,” he said in an emailed comment, adding that it will likely “consolidate there for the foreseeable future
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