Following a two-day meeting of the Federal Open Markets Committee (FOMC), the Federal Reserve raised its benchmark interest rate an additional 75 basis points.
Bitcoin’s price reacted erratically to the news, dropping $1,000 moments after the announcement.
- The hike, revealed Wednesday at 6:00 p.m. UST, takes the central bank’s new key rate to between 3.0% and 3.5%.
- Most investors were expecting a 75bp hike ahead of the meeting, but markets had priced in around a 15% chance of a full rate hike.
- Just 1 minute after the announcement, Bitcoin jumped from around $19,700 to $18,700. It has since recovered to around $18,946, at the time of writing.
- Volatility following a Federal Reserve decision is familiar ground for Bitcoin. The price fluctuated rapidly after Fed Chairman Jerome Powell’s speech in Jackson Hole last month, where he reiterated his commitment to fighting inflation.
- Reducing inflation has been the Fed’s policy theme for months, as inflation hit all-time highs throughout 2022. The August CPI came in at 8.3% last week – higher than analysts expected.
- Tighter monetary policy sent stocks and crypto tumbling throughout the year. Bitcoin is now down 70% from its November high of $69,000, while the NASDAQ is down 28% since the start of the year.