Bitcoin showed little immediate reaction to the Federal Reserve’s rate hike, while historical parallels and market positioning offer competing signals for its next move.
Bitcoin absorbs the Fed’s decision
The Federal Reserve’s decision to raise interest rates drew a unanimous vote, but Bitcoin had little immediate reaction. The cryptocurrency held near $76,000 before and after the announcement and was trading at $76,663 at the time of writing.
Positioning shows two-way pressure
Trading activity pointed in both directions. Bitcoin recorded around $15.5 million in net spot buying, while perpetual futures showed approximately $82 million in net selling over the preceding hour. Around 2,170 Bitcoin moved onto exchanges after the rate increase, followed by a withdrawal of 1,260 Bitcoin.
The 2022 comparison cuts both ways
The historical comparison offers both a potential boost and a warning. Bitcoin was already roughly 40% below its November 2021 peak of around $69,000 when the Fed first raised rates in March 2022. It then rallied roughly 18% over the following 12 days, before subsequently falling around 50%. Bitcoin is currently around 40% below its October high.
Inflation and expectations remain central
The macro backdrop remains unsettled. Core inflation has eased to 2.4%, while annual headline inflation has stayed above 2% for more than five years. Markets are pricing in a further 75 basis points of tightening over the next six months, and the expected 25-basis-point increase was largely priced in before the decision.
What to watch next
The near-term signal remains unresolved. Bitcoin prices had held in a tight range above $76,000 until yesterday, but chart analysts characterize the range breakdown as bearish. Its recent relationships with traditional assets also vary: Bitcoin’s correlation to the S&P 500 is 0.43, to the Nasdaq is 0.30, to gold is 0.28, and its short-window correlation with the Dollar Index is nearly zero.