Fed Rate Hike Revives Concerns of Bitcoin Crash

The Federal Reserve's latest interest rate hike has brought back into focus the possibility of a sharp crash in Bitcoin, following a brief rally. According to CoinDesk, Bitcoin's current outlook most closely resembles the 2022 rate hike cycle.

After hitting a peak of around $69,000 in November 2021, Bitcoin dropped approximately 40% during the Fed's first rate hike in March 2022. Today, the price sits 40% below the peak of approximately $126,000 seen in October.

Following the first rate hike in 2022, Bitcoin rose by 18% within about 12 days. However, this short-term recovery was followed by an approximately 50% decline. This historical similarity raises the possibility of a relief rally followed by a more sustained downturn in the new rate cycle.