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Bitcoin Down to Below $28,000, as Fed Hikes Interest Rates by 25 Basis Points

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Bitcoin's Price Movement
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Investors hunkered down before the U.S. Federal Reserve’s next interest rate decision on Wednesday, causing Bitcoin to lose momentum on Monday and teeter-totter above and below $28,000. 

Bitcoin Decrease in Price Despite U.S. Federal Reserve’s Announcement

Just hours after the U.S. The Federal Reserve announced it had teamed up with five other major central banks to ensure a steady flow of the U.S. dollar, a dominant reserve currency, in the global financial system, Bitcoin had climbed above $28,400.

At the time of writing Bitcoin (BTC) is trading at $27,767.75 with a 24-hour trading volume of $34,070,515,733, which shows a 2.46% decrease in price over the last 24 hours and an 11.92% increase in price over the past 7 days. The market cap of Bitcoin, which has a circulating supply of 19 million BTC, is valued at $536,856,214,323.

Bitcoin’s value has seen an increase in the past few days as concerns over a worldwide banking crisis have eased, and investors are hopeful for a more accommodative monetary policy from the Federal Reserve. There is even speculation that the Fed may pause its string of interest rate hikes, starting with the upcoming Federal Open Market Committee meeting. Although last week’s inflation report only showed moderate improvement, they still consider a 25 basis point increase the most likely scenario.

The sudden surge in the value of bitcoin shows growing concerns regarding potential issues in the banking industry, especially following the collapse of Credit Suisse. Additionally, the current bank runs are causing difficulties in obtaining gold, while apprehension regarding inflation and hyperinflation in certain nations is prompting individuals to shift their focus toward bitcoin.

Federal Reserve Increases Dollar Swap Line Frequency as Bitcoin’s Future Remains Uncertain 

 The Federal Reserve announced that they would increase the frequency of dollar swap lines with several major central banks from weekly to daily. These include:

  • The European Central Bank
  • The Bank of Japan, the Bank of England
  • The Bank of Canada
  • the Swiss National Bank

This move eases exchange rate volatility and prevents strains on the supply of credit for households and businesses worldwide.

According to Delphi Digital’s Shaughnessy, it’s difficult to determine what’s driving the current surge in Bitcoin and whether it’s sustainable. However, he suggested that the global banking crisis could be a factor, as people are looking for alternative investments and turning to cryptocurrencies. This is the first time in history that such a crisis has occurred alongside the widespread recognition and adoption of cryptocurrencies.

Laguna Labs’ Rust believes the Federal Open Market Committee’s (FOMC) upcoming announcement may influence Bitcoin’s future. He stated investors are anxiously awaiting the Fed’s next interest rate decision, as it might impact Bitcoin’s trajectory. If the Fed scales back its current policy, Rust believes markets will be nervous and it will be a testing time for Bitcoin.

Ether, the cryptocurrency with the second-largest market capitalization, was trading at around $1,763. other cryptocurrencies in the top 25 by market value, such as APT (the token of Aptos’ layer 1 network) and MATIC (the native cryptocurrency of Polygon’s layer 2 platforms), saw drops of over 8% and 6%, respectively. In contrast, SOL, the token of the Solana blockchain, saw a slight increase.

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