Bitcoin and the rest of the crypto market have been in a festive mood in response to the U.S. Federal Reserve’s interest rate hike, sending both Bitcoin and Ethereum climbing in prices.
The Fed’s announcement has sent Bitcoin’s price up by 5%. As of this writing, Bitcoin is trading at $22,837, up 7 percent in the last 24 hours. More so, Ethereum’s price also spiked by 11.6%; hitting $1,550, data from Coingecko show, Thursday.
In fact, the entire crypto market is on a positive outlook with the total crypto market cap at $1 trillion.
Bitcoin was down the past week with its price plunging below $21,000. But, with Fed’s latest 0.75% rate bump, the BTC price has skyrocketed once again.
Fed Battling Inflation With Interest Rate Hikes
The Federal Reserve attempts to buffer inflation with a 0.75% rate increase. The central bank’s move on the rate hike is said to be in the country’s best interest especially since the U.S. Bureau of Labor Statistics recently broke it to the public that the Consumer Price Index or inflation rate is at 9.1% in June, a 40-year high.
The Fed’s continuing rate hikes have sent the negative message that the country could be in danger of a recession.
It triggered a domino effect. Following the Fed’s rate hike, the U.S. interest rates have also spiked at a range of 2.25% and 2.5% which is at extreme levels since the COVID-19 pandemic started. The U.S. central bank has recently revealed this development at the Federal Open Market Committee held Wednesday.
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Survey: 96% Of Americans Worried About Inflation
The Fed has been trying to put a rein on the high prices with an increase in interest rates for the longest time. U.S. Bureau of Labor Statistics disclosed that the biggest factors adding up to the inflation rate are shelter, gasoline, and food price hikes.
Reportedly, a CNBC poll revealed that around 96% of Americans have been particularly worried or concerned lately regarding the gas, shelter, and food price increase.
To beat inflation, the Fed has the option to constrict the supply of money. So, it resorts to bumping the interest rates which in effect, makes loans expensive. The 0.75% rate hike was expected although it was earlier ruminated that the central bank may go for a 1% rate hike when inflation mellowed in June.
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The recurring high prices and interest rate hikes have fueled fear in citizens as the danger of a recession continues to escalate. It has heightened levels of uncertainty in global markets especially because a recession would most likely happen following two straight quarterly GDP drops.
The GDP as presented by the Bureau of Economic Analysis has shown that the economy has dwindled by 1.6% as shown in the first financial quarter and economists are concerned that a decline is possible too for the second quarter.
GDP Q2 numbers will be announced tomorrow. And the White House has already prepared the public for this important announcement with an interview transcript and blog post by Janet Yellen, the Treasury Secretary who has set the records straight that two consecutive quarters is not indicative of a recession.
More so, U.S. President Biden made an assurance of sorts that the country is not going to face a recession.
Crypto total market cap at $1.02 trillion on the daily chart | Source: TradingView.com
Featured image from Euronews, chart from TradingView.com