Why is the Fed raising interest rates?
We were all on the edge of our seats waiting for Fed Chairman Jerome Powell to make his announcement, but investors had already priced in a rate hike. In fact, the latest report CPI a USA showed that inflation rose 8.3% in August from a year earlier, six percentage points above market expectations.
Although lower than the July inflation report (8.5%), it shows that the United States, and possibly the world, has a serious inflation problem. This is the reason why all analysts expect the Fed to proceed with further rate hikes in the medium term.
Some think that the fed will be even more aggressive and proceed with a full 1% raise. This will be the biggest increase in interest rates in 40 years, which is sure to shake global financial markets considerably.
What does this mean for the price of Bitcoin (BTC)
Any increase in interest rates makes investors nervous, especially when it comes to risky assets like Bitcoin. This is why Bitcoin lost around 2% of its value on Wednesday after gaining 4% during the day.
Bitcoin rises to 3.8% in the middle of the Paris session. Show that the impact of the rate hike is already taken into account in its price. Bitcoin is still moving below $20,000, giving the possibility ofbuy the dip.
Since the effect of the Fed has dissipated, the slightest piece of good news is enough to push the price above $20,000.