Bitcoin Experiences Mild Recovery Following Fed’s Rate Hike Decision
Bitcoin, the world’s largest cryptocurrency, has seen a mild rebound to around $29,250 following the latest rate hike announcement from the Federal Reserve.
As anticipated by U.S. market observers, the Federal Reserve (Fed) concluded its May 2023 meeting by raising the benchmark interest rate by 0.25%, bringing it to 5.25%. This marks the 10th consecutive rate hike by the Fed.
Fed’s Benchmark Interest Rate Volatility Post-May 2023 Adjustment
Source: Trading Economics
Despite ongoing turmoil in the U.S. banking sector since March, including the recent collapse of First Republic Bank, the second-largest bank failure in U.S. history with assets of $229 billion, the Fed has continued its strategy of increasing interest rates to combat inflation.
Inflation in the U.S. fell to 5% in March, marking its lowest level in over a year and the ninth consecutive month of decline. The Fed's announcement reaffirmed its commitment to bringing inflation down to 2% through future rate hikes, quantitative tightening, and monetary policy adjustments. However, the Fed acknowledged that the lag effect of these measures might impact economic activity, financial conditions, and the inflation situation itself.
During the press conference following the rate hike decision, Fed Chair Jerome Powell indicated that the central bank has not yet discussed whether it will pause rate hikes in the upcoming June meeting. Observers estimate an over 80% chance that the Fed may halt rate increases in the June session.
Bitcoin's price did not experience significant volatility at the time the Fed’s 0.25% rate hike news broke in the early hours of May 4th. However, in the hours following the announcement, Bitcoin gradually recovered from $28,200 to $29,266, before slightly adjusting back to $29,000 as of this writing.
15-Minute Chart of BTC/USDT on Binance as of 08:15 AM on May 4, 2023
The U.S. is expected to release April’s inflation data at 07:30 PM on May 10 (Vietnam time). The next Fed meeting to discuss rate adjustments will take place on June 14-15.
