• Bitcoin has broken its $23k resistance level after the US Federal Reserve announced the start of the disinflationary process of the US economy, raising the interest rate by another 25 base points.
• According to Coingecko, Bitcoin rose 3.2% in the last 24 hours as the announcement of the rate hike hits the markets.
• However, the central bank is still not optimistic about their future moves this year with Federal Reserve chairman James Powell eyeing more rate hikes in the near future.
The US Federal Reserve has recently announced the start of the disinflationary process of the US economy, raising the interest rate by another 25 base points. This acknowledgement has provided a boost of confidence to the broader financial market and has also led to the breaking of Bitcoin’s $23k resistance level.
According to Coingecko, Bitcoin rose 3.2% in the last 24 hours as the announcement of the rate hike hits the markets. This move by the US central bank has given investors the confidence to invest in more risky assets such as stocks and cryptocurrencies. Major indices like the NASDAQ have climbed despite the increase in interest rate.
However, despite the optimism surrounding the Federal Reserve’s decision, US Federal Reserve chairman James Powell indicated that the Fed may be winding down its rate hikes due to the slowdown in inflation. At a press conference, Powell stated that “We can now say I think for the first time, that the disinflationary process has started.” The 25 bps hike comes after last month’s December Consumer Price Index report which shows a downward trend in CPI since the Fed’s aggressive quantitative easing measures last year. However, at 6.5%, it is still higher than the central bank’s target inflation rate of 2%.
It is clear that the Federal Reserve is not yet certain about their future moves and that there is still some uncertainty surrounding the US economy. However, the acknowledgement that this is the start of the US economy’s disinflationary process has given confidence to the financial market and has allowed investors to take more risks.
It has yet to be seen how this move will affect the markets in the long run, but for now, investors remain positive that the US economy is heading in the right direction.