Bitcoin often dips when the Fed raises rates
Lookonchain recently looked at the performance of bitcoin (BTC) before and after the eight most recent Fed rate hikes.
Bitcoin’s performance during Fed announcements
The Federal Reserve will announce its interest rate decision in the coming hours. While preparing for this, Lookonchain looked at BTC’s performance in recent rate hikes.
1/ The Fed rate decision will be released in 10 hours.
The figure below shows the price change of $BTC before and after the announcement of the Fed rate decision in the past year.
And we noticed that some institutions transferred funds into the crypto market.👇 pic.twitter.com/4sGulbAVk0
— Lookonchain (@lookonchain) March 22, 2023
In May 2022, the Fed raised rates by 50 bps. Before the hike, BTC was surging upwards. A few hours before the hike, the coin dipped. Moments following the rate hike, this coin returned to recording upswings. Oftentimes, BTC dipped when Fed raised rates.
However, the story differs slightly from the September, November, and December 2022 rate hikes. In this period, the coin was in an uptrend before the rate hikes but changed directions following the announcements.
Earlier this year, on Feb. 2, the Fed seemed to slow their rate hikes, raising interest from 4.5% to 4.75%, only a 25 points increase. In the moments before the hike, BTC was recording some upswings. BTC took a sharper upswing after the 25 points increase announcement.
Institutions transferring funds into the crypto market
Reports suggest that a majority of investors anticipate a 25 bps hike. Hence, many predict that the announcement could trigger even more robust price actions.
Due to the bullish sentiment, Lookonchain indicates that institutions invest more in the crypto markets. For instance, Tether minted $5 billion USDT on Tron in the past seven days.
Bastion Trading (theskybomber.eth) transferred 230.4 million USDT to Binance in the past seven days. Wallet address “0x6B8F” moved 25 million USDT it received from Tether Treasury to FalconX.
As investors buy more, concerns are surfacing that BTC could plunge 30% to trade below $20,000 following the announcement. If BTC dives below $20,000 a large number of longs who bet on the $20,000 support will suffer liquidation.
