Bitcoin (BTC) has surged, courtesy of the Feds decision to increase interest rates. The cryptocurrency soared closer to $40,000, and is still sustaining gains at press time. Asides from the big bull’s rise, the entire cryptocurrency market has reacted to the news, as the overall market records a 5% spike.
Feds interest rate hike
On Wednesday, the Federal Reserve increased the interest rates by 50 BPS. The move imitates the Feds previous attempts at curbing inflation in previous times. In the upcoming meetings, the Feds are also expected to mirror this move, by raising interest rates by another 50 BPS. In the meeting after that, another 50 BPS might also be added.
The Chairman of the Fed, Chairman Jerome H. Powell remarked at a news conference on Wednesday, that he recognizes the surge in inflation, as well as the economic effects it is having on the country at large. He then assured the public that the country was well equipped to combat the economic crisis.
Excerpt of his statement from the conference reads;
“Inflation is much too high. We understand the hardship it is causing, and we are moving expeditiously to bring it back down. We have both the tools we need and the resolve that it will take to restore price stability on behalf of American families and businesses.”
Powell added that it is the Feds duty to keep inflation from dominating the country’s economy. He remarked that an essential part of suppressing inflation includes hiking the interest rates. “Higher mortgage rates and higher borrowing rates, thing like that.” He explained.
He wrapped up by asserting that the result of the move will come with its own downsides. He however, still maintains that everyone, specifically people on the lower end of the income distribution, as well as people on fixed income, will be “better off with stable prices.”
The U.S Inflation and its positives for Bitcoin
The current inflation in the United States, which has been dubbed the highest in 40 years, has given free PR to the cryptocurrency industry. Particularly Bitcoin.
The standard cryptocurrency welcomed a significant number of U.S. billionaires, including the likes of Thomas Peterffy, Paul Tudor, and Ray Dalio. They all collectively attested to using Bitcoin as a hedge against the rising U.S. inflation.
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