Bitcoin drops below $18.000 level after Federal Reserve announces rate hike
The Federal Reserve announced yesterday, December 14, a interest rate hike of 0,5 points, placing rates in the range of 4,25% - 4,5%. With inflation falling to 7,1%, the increase has been lower than expected, as the latest uploads were 0,75 points.
Although Jerom Powell has explained that, from now on, The Fed will slow the pace of interest rate hikes, the president of the US central bank has also indicated that the objective is to place the rates above 5% by the end of 2023, so further increases are expected, albeit on a smaller scale.
In this sense, to determine the pace of the next increases, the Federal Reserve will take into account the Tightening of monetary policy accumulated in recent months, as well as the possible negative effects it could have on the economy and financial developments.
The Fed's interest rate hike and Bitcoin
The price of Bitcoin, which had responded positively to falling inflation, lost most of its gains yesterday, losing the $18.000 level againBitcoin price fell 3,5% following the Federal Reserve announcement.
Most markets had a similar reaction to Bitcoin. For example, the S&P fell 1,5% and the Nasdaq lost 1,8%In the crypto world, Ethereum suffered losses similar to those of Bitcoin, falling 3% after the FED's decision was announced.
According to Coinglass data, cryptocurrency exchanges saw more than 100,000 transactions liquidated. $18 million in operations the hour following Jerome Powell's announcement.
Will interest rate hikes trigger a recession?
Jerome Powell has explained that his goal is to achieve a soft landing of the economy, slowing demand enough to bring inflation down to 2%. However, the Fed chairman has also indicated that, if he has to choose, he is willing to cause a recession, since his main goal is to achieve price stability.
Criticism of this speech was not long in coming. Elon Musk posted a message on Twitter warning that continued increases in interest rates could lead to a recession much more serious than expectedOther experts have warned of the danger of increasing job losses.
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