Bitcoin hit its highest level since August last year on Wednesday (1st), briefly surpassing the $24,000 mark after the Federal Reserve announced a one-yard rate hike and Chairman Powell was optimistic about the progress of inflation.
The Federal Open Market Committee (FOMC) on Wednesday, as expected, raised the target range for the federal funds rate to 4.5% to 4.75%, the highest since October 2007.
“Progress has been made in curbing inflation, and we can now say for the first time that the process of deinflation has begun,” Powell said in a post-meeting news conference.
Although Bauer emphasized that the work of curbing inflation has not been completed, after he said that inflation has made progress, it means that he has not actively released hawkish remarks to oppose this year’s rebound in global markets, resulting in a series of stocks, bonds, and even cryptocurrencies. Risk assets were delighted to move higher.
Bitcoin, the largest cryptocurrency by market value, surged 2.4% on Wednesday and once touched $24,100. Ethereum also rose 3% at the same time. Before the deadline, the increase in cryptocurrency fell back. Bitcoin was temporarily reported at $23,878, and Ethereum was temporarily reported at $1,673.
Cici Lu, founder of blockchain consultant Venn Link Partners, said: “Cryptocurrencies rose on risk sentiment following the Fed’s dovish comments. And institutional buying has increased in recent weeks.”
Bitcoin usually follows the volatility of the stock market. As the Federal Reserve started a cycle of raising interest rates since March last year to curb 40 years of high inflation, investors sold off almost all risk assets last year. Because when interest rates are high, investors prefer to invest in safe-haven assets such as gold or the US dollar.
Jodie Gunzberg, executive editor of CoinDesk Indices, noted: “Historically, as interest rates rise modestly, rather than sharply, bitcoin returns have increased substantially, outpacing traditional assets, and speculative buying is expected to return quickly.”