The Fed’s policy shifts have caused a 40% drop in the price of Bitcoin recently.
The Federal Reserve Board will now wrap up its monetary policy meeting today.
The Bitcoin price has been stagnant in the last several days as investors await the Federal Reserve’s interest rate announcement. For much of the week, the price has remained at 39,320. The current price is a long way from its all-time high. Because of its power to generate money and tinker with interest rates, the Federal Reserve is the most significant worldwide institution.
As a result, the Federal Reserve adopted its most expansive monetary policy framework on record in 2020. For the first time in history, it lowered interest rates to the lowest level on record and expanded its balance sheet via quantitative easing (QE). Over $9 trillion is now sitting on the bank’s balance sheet.
Significant Impact on Cryptocurrencies
As a result of this approach, high-risk assets saw a decrease in value. Moreover, a record number of high-growth technology equities plummeted. Cryptocurrencies like Bitcoin and Ethereum were no exception. However, the Fed’s policy shifts have caused a 40% drop in the price of Bitcoin recently. As a result, purchasing of assets has already been curtailed.
As previously announced, the Federal Reserve Board will now wrap up its monetary policy meeting on Wednesday. The bank is expected to raise its interest rate by 25 basis points. In an effort to moderate the pace of inflation, some predict a 0.50 percent rate increase. If the Federal Reserve raises interest rates, Bitcoin’s price might fall further. As a result, Bitcoin (BTC) and other risky assets are expected to stay under pressure from the Federal Reserve.
On the other hand, some experts believe that since the market has already priced in the scenario, Bitcoin will begin its recovery route after the rate rises. Moreover, everyone knows that the Federal Reserve will raise interest rates at some point.