over 1 year ago • 1 min
Bitcoin has rallied every time the Federal Reserve has hiked interest rates this year, climbing 4.6%, 5.2%, and 1.6% in March, May, and June. But Wednesday was different: bitcoin shot up 8.1% following the announcement of a 0.75 percentage point hike. That marks the OG crypto’s fifth-best day of 2022 overall, and eclipses the rally we saw after a hike of the same size last month.
If we had to speculate, it could be because crypto investors are becoming more optimistic that the Fed’s gung-ho rate-hiking campaign will successfully bring inflation down. That would allow the central bank to stop being so aggressive about hikes, which are a thorn in the side of a risky asset like bitcoin. But there are a couple of caveats worth keeping in mind here.
First, the previous rate-hike day rallies have reversed pretty promptly, so the next few days will be key to assessing if this really is the start of a longer-term rally. And second, bitcoin investors might be getting ahead of themselves: the Fed chairman has said he wants to see “clear and convincing” evidence of an inflation slowdown before the Fed goes easy on hikes, and there’s certainly nothing of the sort yet. So keep an eye on the next US inflation update – due on August 10th – to see how things are going on that front.
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