The US Federal Reserve has raised interest rates by another 25 basis points. This represents the 9th consecutive rate increase by the federal agency in an effort to curb inflation.
The price of Bitcoin rose above $27.000 per unit following the speech by Jerome Powell, chairman of the United States Federal Reserve (FED), on Wednesday, in which a new increase of 25 basis points in interest rates was confirmed.
The increase in interest rates was in line with what analysts and investors had expected in recent days, which is why the price of the world's leading cryptocurrency reacted positively.
The Fed has opted to raise rates as part of its strategy to control inflation, stimulating savings and making access to credit more difficult. With this strategy, which is implemented over the long term, the Fed hopes to bring inflation levels to 2% by 2025.
Bitcoin rises after the FED announcement
According to data from CoinMarketCap, the main platform for tracking the price of cryptocurrencies, Bitcoin is trading on the market at a price of $27.700 per unit. BTC shows a recovery of 1,38% in its price in the last hour and a growth of 13,3% weekly.
Source: CoinMarketCap
Bitcoin traders have traded over $32.300 billion worth of BTC in the past few hours, mostly via CEXs. Trading volume for the cryptocurrency is down more than 7% compared to the previous day's data.
Meanwhile, the price of Ethereum has also gained 1% in the last hour, trading at around $1.750 per ETH at the time of writing.
In addition to the increase in interest rates within the expected margins, the banking crisis unleashed in the United States has been fueling the bullish rally that cryptocurrencies have been experiencing since last week.
Inflation and banking crisis
The monetary policy implemented by the US central bank has put the banking system in a difficult situation. With the recent increase, interest rates have reached 5%, their highest level since June 2006.
As Hugo Botto, co-founder of the Healthy Pockets channel, points out, the Fed wants to combat inflation levels by raising rates. However, this strategy has also put the stability of banks and financial institutions at risk.
Just a week ago, Silicon Valley Bank, Signature Bank and Silvergate Bank collapsedAnalysts attribute the decline mainly to the aggressive monetary policy implemented by the Fed to control inflation, constantly raising interest rates. As noted by this media, the measures taken by the federal agency have led banks to see a decrease in investment and suffer unrealized losses.
Powell acknowledged that there is currently a lot of uncertainty about the situation of the country's banking sector. "We are trying to assess something that is so recent, and it is very difficult, there is so much uncertainty," he said, referring to the collapse of the banks.
The Fed chairman also stressed that a slowdown in interest rate hikes is unlikely this year, although analysts expect the agency to keep increases moderate for some time.
By July of this year, the Fed plans to launch its FedNow automated payments system, which will allow users and businesses to make instant payments 24/7.
Continue reading: More than a hundred banks in the United States are getting involved in the cryptocurrency industry
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