Bitcoin Unfazed by Rate Hike as Fed Seeks to Tame Inflation
The Federal Reserve raised interest rates for the first time since 2023, causing some initial market volatility. However, Bitcoin's price has settled and is currently only 1% higher over a 24-hour period.
According to Grayscale's crypto research team, this rate hike is unlikely to have a significant impact on Bitcoin's value. In a note written by Zach Pandl, head of research at Grayscale, he stated that the move was a 'mid-cycle adjustment' rather than a fundamental change in monetary policy.
Pandl noted that low interest rates can lead to increased liquidity and risk-taking among investors, which can benefit Bitcoin. However, when the Fed raised interest rates in 2022 to combat inflation, it negatively affected the price of Bitcoin due to its impact on opportunity costs.
Bitcoin's recent price of around $76,581, up 18% over the past 30 days, suggests that investors are not overly concerned about the rate hike. In fact, the coin has benefited from other news, such as the U.S. Treasury doubling its liquidity-support buyback operations in August.