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Bitcoin has shown the world just how resilient it can be. Not long ago, the Federal Reserve decided to raise interest rates by another 0.25 basis points. Under normal circumstances, the price of bitcoin would fall, and this time around was no exception as the world’s number one digital currency by market cap dropped from $28K to $26K.
Bitcoin Is Still Alive and Kicking
However, things didn’t stay there long, and just a day or so later, BTC was back at $28,000 per unit, an increase of about 70 percent from where it was during the final two months of 2022, arguably the most bearish year on record for the asset.
This was the ninth consecutive interest rate hike enforced by the Fed, and it was believed that the current banking crisis being witnessed in America would be enough to convince the Fed’s top members that interest rate hikes needed to end altogether or should at least be curbed. Alas, this is not the case, and Jerome Powell – the man in charge of the agency – has stated 2023 is still prone to further hikes given inflation remains a problem.
Michael Safai of crypto trading company Dexterity Capital took issue with the Fed’s attitude and stated:
The hope was that the long-awaited dovish tone from the Fed would finally arrive in the midst of this banking crisis. Those hopes were dashed by Powell’s comments that rate hikes could continue so long as things continued to stabilize, weakening some of the momentum that has been leading crypto’s rise in recent days. A lot of what has driven the latest bitcoin rally – the ongoing weakness in the banking system and the potential for increases in central bank balance sheets – hasn’t disappeared completely. This could provide a floor for cryptocurrencies once the broader institutional reaction to the Fed settles down.
He also mentioned that while bitcoin is again up, some people are likely to experience fear from the recent (and temporary) dip bitcoin incurred, and that this could be enough to limit trading prospects for a little while. He commented:
I think a lot of traders will be deflated by bitcoin’s retreat towards $25,000, since the markets were really hoping to break past the symbolic $30,000 mark. This will probably sap some of the momentum behind crypto prices in the short term, but that could easily change if the banking sector continues to show weakness. For now, volatility is spiking again, bringing some much-needed volume and energy to the markets.
Leave It to Yellen to Say Something Stupid
Investors are getting a few other backhanded slaps at the time of writing in the form of comments made by present Treasury Secretary Janet Yellen.
Not long ago, Yellen explained she is not considering expanding FDIC coverage for deposits greater than $250K.