Fed Rate Hike Triggers Bitcoin Price Volatility Similar to 2022

The US Federal Reserve raised interest rates for the first time in over three years by 25 basis points, setting its target range at 3.75%-4.00%. This move has sparked a comparison with the 2022 market scenario, where Bitcoin's price declined before rebounding and then dropping further.

Historically, isolated rate hikes are rare during tightening cycles. Since 1994, the Fed has made only one single rate hike. The current market has limited historical perspective, making the 2022 comparison particularly relevant.

The 2022 precedent shows a rebound before a decline in Bitcoin's price. After reaching nearly $69,000 in November 2021, the price had lost nearly 40% by the first rate hike in March 2022. Today, it is also about 40% below its October peak of around $126,000.

The movement observed after the March 2022 decision provides another point of comparison. Bitcoin rose about 18% over the twelve days that followed before dropping about 50%, leading to a prolonged decline phase.