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Unexpectedly: Bitcoin surges after Fed raises interest rates

Unexpectedly: Bitcoin surges after Fed raises interest rates

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Answer Unexpectedly: Bitcoin surges after Fed raises interest rates

The Federal Reserve raised interest rates for the first time since 2018.

This comes after months of promises to tackle inflationary pressures in the United States of America.

According to the analysis, the increase in the interest rate is a moderate increase of 25 basis points.

Immediately after the announcement of the increase in the interest rate, the bitcoin fell under the level of 40 thousand dollars, but this did not last long, as the bitcoin returned to the 40 thousand dollars level, and then continued its rise to reach its trading price at the present time at 41 thousand dollars.

At its FOMC meeting on Wednesday, the Fed cited growing concern about inflation in the context of supply chain difficulties and the new war in Ukraine as justification for its action.

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In particular, the Fed believes that the Russian-Ukrainian conflict will lead to higher inflation and a slowdown in GDP.

Inflation has been increasing on an annual basis every month since October, reaching a 40-year high of 7.9% last month.

Earlier in March, a professor at Wharton University urged the Federal Reserve to tackle this inflation to protect the US dollar.

Bitcoin is often referred to as an inflation hedge or digital gold, but it fell immediately after the rate hike was announced.

The price dropped to $39,000 but that was short-lived and Bitcoin rebounded above $40,000.

The Dow Jones Industrial Average, Nasdaq, and S&P 500 also erased key gains from Tuesday after the rate hike announcement.

According to a Federal Reserve statement:

The committee also expects to begin reducing its holdings of Treasury securities, agency debt and agency mortgage-backed securities at an upcoming meeting.

More price hikes will reportedly be announced later this year.

The 0.25% increase was approved in an 8-to-1 vote, with one member pushing for a larger 0.5% increase.

Chairman Jerome Powell said in a press conference following the meeting:

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The median forecast for the appropriate level of the federal funds rate is 1.9% by the end of this year.

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