October 1, 2022

After a two-day meeting of the Federal Open Market Committee (FOMC), the Federal Reserve raised the benchmark interest rate by another 75 BPS.

Bitcoin price reacted erratically to the news, dropping $1,000 just moments after the announcement.

  • The increase, revealed at 18:00 UST on Wednesday, raises the central bank’s new interest rate to between 3.0% and 3.5%.
  • Most investors had expected a 75-point hike ahead of the meeting, but markets had roughly a 15% chance of a full percentage point rate hike.
  • Just 1 minute after the announcement, Bitcoin dropped from approximately $19,700 to $18,700. It has since been restored to around $18,946, at the time of writing.
  • Volatility following a Federal Reserve decision is familiar territory for Bitcoin. Price fluctuated rapidly following Fed Chairman Jerome Powell’s speech in Jackson Hole last month, where he reiterated his commitment to tackling inflation.
  • Lowering inflation has been the Fed’s policy theme for months, as inflation hits historic highs through 2022. 8.3% last week – more than analysts expected.
  • The tightening of monetary policy sent both stocks and cryptocurrencies down throughout the year. Bitcoin is now down 70% from its November high of $69,000, while NASDAQ is down 28% year to date.
Bitcoin / USD. Source: TradingView

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