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The Federal Reserve of the United States just recently announced an increase in the interest rate of 25 basis points. This comes after a series of hikes that were formally reported throughout the year and ranged from 50 to 75 basis points. However, many have already braced for a reduction in the interest rate because Jerome Powell, the Chair of the Federal Reserve, had previously announced a reduction in rate hikes for January of this year. At the time of writing, the announcement has been met with much approval by the cryptocurrency market, with major indexes now trading in the green.
Crypto Markets Go Up
As a result of the announcement made by the Fed, the cryptocurrency with the largest market capitalization, Bitcoin (BTC), climbed to $23,450 from $23,050, while the altcoin supremo — Ethereum’s (ETH) price went from $1,560 to hit $1,623.
Within minutes after the announcement, the prices of flagship cryptocurrencies such as XRP, Solana, Dogecoin and Chainlink experienced a significant uptick in price. However, out of the top 150 coins by market value — Frax Shares (FRX), Mina (MINA), Aptos (APT), Terra (LUNA) and Gala (GALA) were the most hit, with some falling by over 6% in the past hour.
Wall Street was already off to a shaky start. The U.S. indexes fell ahead of the Federal Reserve’s decision on interest rate hikes, with S&P500 dipping by 0.25%, Nasdaq by 0.15% and Dow by over 0.50%. Gold, on the other hand, which is more often than not regarded as a safe haven, rose by 0.87%.
Read More: US Fed Hikes Interest Rate By 25 bps, Says Hike Appropriate
Rate Hikes Thus Far
In March 2022, the Federal Open Market Committee (FOMC) hiked interest rates by 0.25%, marking the first increase in rates since 2018. In its March policy meeting, it forecasted six additional hikes, all of which have since been implemented. The Federal Reserve continued its policy of economic tightening in May when it announced the first hike in interest rates of 0.5% since the year 2000. Before today’s reduction of 0.25%, each of the subsequent four rate increases—in June, July, and September—was set at 0.75%, whereas the last one was recorded at 0.50%.
While speaking on the recent rate hike, the Fed was quoted as saying:
The Committee anticipates that ongoing increases in the target range will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time.
Despite this, investors are concerned about the strategy that the central bank would use to reign in price inflation, in addition to the prospect of a catastrophic economic downturn, or recession.
As things currently stand, the price of Bitcoin (BTC) has moved to $23,450 at the time of composition. And, according to the crypto market tracker published by CoinGape, this results in a growth of 1.38% over the past 1-hour, in contrast to a jump of 2.77% over the last seven days.
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