Cryptocurrency prices climbed on Thursday after the Federal Reserve decided to raise interest rates for the first time since 2018.
The U.S. central bank raised the benchmark federal funds rate by 0.25% to a target range of 0.25% to 0.50%.
Bitcoin was up nearly 2% at $41,073 at the last check, according to CoinGecko, while Ethereum was up 5.4% to $2,812 and Dogecoin was up 3.6% to $0.117618. Avalanche surged 14.7% to $80.98.
“Massive cryptocurrency market rally”
Ryan Detrick, chief market strategist at LPL Financial, noted that “the Fed hasn’t wavered much.”
“Yes, they lowered their economic forecasts for 2022 and they also increased inflation, but most of that has already been priced in,” he said. “Overall, they are still seeing strong growth, which helps Support the recovery.”
“Bitcoin was able to revisit the $40,000 level after Fed Chair Jerome Powell hinted that monetary policy would impose constraints on the U.S. economy, sending the dollar sharply lower,” said Edward Moya, senior market analyst for the Americas at Oanda.
“Today, Bitcoin led a massive cryptocurrency market rally,” said Alexander Mamasidikov, co-founder of mobile digital bank MinePlex. “The unprecedented growth has been spurred in part by A quarter-point rate hike by the Federal Reserve was not enough to worry cryptocurrency investors, cementing their new buying spirit. “
scroll to continue
Mamasidikov said the broader crypto ecosystem now “has more news fundamentals to focus on, as as many as six rate hikes are expected throughout the year.”
“Before the impact of rate hikes starts to be felt in the wider economy, investors in emerging asset classes will come in at deep discounts that translate into gains in the long run,” he said.
The high price of $50,000 “remains an important target for the mid to late second quarter of this year,” he added.
“Very bullish on Bitcoin”
Bitcoin and crypto expert Finder Keegan Francis said, “In terms of short-term impact on Bitcoin, I think both will happen.”
“Meaning, I can see the price reacting well as it acknowledges that inflation is high, or it’s coming down due to increased investor cash flow pressures,” he said. “Longer term, the outlook is very clear. Bitcoin is rising because inflation is high.”
Crypto, Francis said, “is more generally a mixed bag because it doesn’t have the same inflation-hedging narrative as bitcoin.”
“I can’t really comment on the impact of this rate hike on cryptocurrencies because it’s anyone’s best guess,” he said, “but overall, my stance is that it’s very bullish for bitcoin.”