Bitcoin recently dipped in market value as the Federal Reserve confirmed what everyone has been speculating for over a month. The central bank recently announced that it would increase the US interest rates from March.
Similar to other financial tools, the largest crypto in the market suffered from the news. You can read more about the Bitcoin price predictions by clicking here.
Jerome Powell, the Fed chairman, released the announcement in a recent news conference. Jerome also stated that despite the interest rates hiking, several additional factors play a role in the market’s conditions. It includes the number of times interest rates will hike this year along with the speed of their surge.
The reason behind the hike is the central bank’s attempt to moderate inflation, as several economists fear a worsening cost-of-living structure. The Fed decided to address the situation by restricting money flow ending expensive financial stimulus activities that surged during the pandemic.
The chairman stated that 2022 would be a year where the economy will gradually divert from the highly accommodative monetary policy placed to address the pandemic’s effects.
While the move seems reasonable, the central bank must strike a balance to maintain market stability. An increased interest rate can negatively affect the economic recovery and even employment levels.
The global market has taken the news similarly as Bitcoin lost 3.76% value to reach 36,821 dollars. In a similar fashion, the stock market also experienced a marginal decline, which might continue through the week. As the Federal Reserve readies for the interest rate hike, the market is bound to be more volatile and investors exposed to risk.