Fed Rate Hike Has Little Effect on Bitcoin Price, Grayscale Claims
The Federal Reserve's recent interest rate hike has had a minimal impact on Bitcoin's price. According to Grayscale, the move was a mid-cycle adjustment and will not significantly affect capital allocation or hinder crypto market adoption. This is because of supportive U.S. Treasury liquidity-support buyback measures.
Grayscale's head of research, Zach Pandl, believes that the one or two rate hikes expected in 2026 will have little to no effect on Bitcoin's price. He compared the current situation to 1997, when a single interest rate hike by the Federal Reserve did not hinder the Nasdaq's growth.
Pandl noted that low interest rates typically lead to more liquidity for investors, allowing them to take risks and buy assets like Bitcoin. However, in 2022, when the Fed started increasing interest rates to combat inflation, it negatively affected Bitcoin's price due to its impact on the opportunity cost of holding non-interest-bearing assets.
Bitcoin is currently trading at around $76,581, up 18% over the past 30 days. This increase is partly attributed to news that the U.S. Treasury would double the size of its liquidity-support buyback operations in August.