Bitcoin Braces for Upcoming Challenges with Impending Interest Rate Hikes

As Bitcoin’s (BTC) price remains range-bound, investors are becoming apprehensive about what the future holds for the world’s largest cryptocurrency. According to Blofin Academy, a crypto market analysis firm, the upcoming interest rate hikes by the Federal Reserve (Fed) may pose the next significant challenge for Bitcoin. The US economy’s resilience in recent months has prompted the Fed to consider raising interest rates to prevent inflation. However, higher interest rates tend to make traditional investments more appealing, potentially decreasing demand for Bitcoin and other cryptocurrencies.

The correlation between interest rates and Bitcoin’s price action has been observed in the past. When interest rates rise, investors usually shift their money into traditional investment vehicles such as stocks and bonds, decreasing demand for cryptocurrencies. Nevertheless, Bitcoin has often been viewed as a hedge against inflation, meaning that it may still hold some appeal for investors during times of economic uncertainty.

The next scheduled Fed meeting is set to take place on June 14, 2023, where the central bank will probably discuss the possibility of raising interest rates in response to the current state of the US economy.

Noelle Acheson, owner of the “Crypto Is Macro Now” newsletter, has cautioned against investors piling into the crypto market at this time. Although the upside potential for Bitcoin is still significant, Acheson suggests that there is currently no compelling reason for investors to take on additional risk. According to Acheson, there are few macro determinants such as debt limit negotiations and Fed rate policy, which are leaving investors waiting for more clarity before making any major investment decisions. Consequently, there is some caution in the market as traders wait to see how these macro factors will play out.

At the time of writing, Bitcoin is trading at $26,700, reflecting a 1.2% increase over the last 24 hours. However, the 50-day Moving Average (MA) has placed the largest cryptocurrency in a narrow range between $26,200 and $26,800. This implies that Bitcoin may face difficulty in surpassing its current trading range in the near term, as the 50-day MA is presently situated at the upper end of this range on the 1-hour chart, making it a challenging level to breach.

Although Bitcoin has experienced some upside movements in recent weeks, the current trading range suggests that further gains may be limited until there is a significant shift in market sentiment or the emergence of a bullish catalyst.

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J-S Tremblay
About the author - J-S Tremblay

I've been involved in the cryptocurrency world since 2016 and trading since 2019. I started Moon and Lambo in 2021. I'm passionate about crypto and love to share my knowledge. I hate bankers and I hope that cryptocurrency will change the financial world for the better. View full profile...

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