Bitcoin Surges Past $24,200 Following Fed's Rate Hike Announcement
Bitcoin has reached its highest value since August 2022 following the Federal Reserve's announcement of a 0.25% interest rate hike.
Fed Slows Rate Hikes
As reported by Coin68, on the early morning of February 2, the Federal Reserve (Fed) announced its latest interest rate adjustment, increasing the benchmark rate by 0.25%.
The current federal funds rate stands at 4.75%, the highest level since the 2008 financial crisis.
Interest Rate Movements by the Federal Reserve (Fed). Source: Trading Economics
The Fed has adhered to its commitment to slow the pace of rate hikes in its most recent update. In 2022, the Fed raised rates seven times, bringing the key economic parameter from 0.25% to 4.5%.
This adjustment is attributed to positive signals from U.S. inflation, which recorded its sixth consecutive month of decline in the December 2022 report.
However, Fed Chairman Jerome Powell stated that the central bank will maintain its rate hike strategy until inflation is firmly under control, with a target rate of 5-5.1% for 2023. Many analysts believe that the Fed may implement 2-3 more rate hikes this year before potentially reversing course.
The Fed will hold eight rate meetings throughout 2023.
Fed's Meeting Schedule for 2023
Crypto Market Continues to Rally
Bitcoin’s price did not see significant volatility at the time of the Fed’s rate hike announcement, as the market had already anticipated the Fed's slower rate increases.
However, in the hours following the announcement, BTC regained momentum and surged around 07:30 AM, reaching a temporary peak of $24,255, marking the highest price of 2023 so far. This is also the first time Bitcoin has breached the $24,000 level since August 2022.
1-Hour Chart of BTC/USDT on Binance as of 08:10 AM February 2, 2023
Ethereum (ETH) quickly followed Bitcoin’s upward trend, hitting $1,696 and reclaiming losses from the FTX collapse in November of last year.
1-Hour Chart of ETH/USDT on Binance as of 08:10 AM February 2, 2023
Top altcoins are also experiencing gains, with fluctuations between 4-12%.
In the past 12 hours, the amount of liquidated derivative positions was just $114 million, significantly lower than previous sudden price swings, with short positions making up 78%.
Liquidation Value of Cryptocurrencies in the Last 12 Hours. Data from Coinglass as of 08:10 AM February 2, 2023
The cryptocurrency market closed January 2023 with a notable recovery, with Bitcoin recording a 39.8% growth, marking its best performance in the last decade.
Several prominent altcoins have even doubled or tripled in value, reaching new all-time highs, including Aptos (APT) and Optimism (OP).
Given that February is typically a favorable period in Bitcoin's historical performance, and with fewer risks from macroeconomic news or internal crypto market events, many cryptocurrency investors are hopeful that BTC will continue its upward trajectory.
