Higher Interest Rates and Inflation: Markets are reluctant to respond to the latest news from Washington. Bitcoin also sells percentages. The market update.
The US Federal Reserve Bank (Fed) has considered raising the key interest rate again for the first time after a long-term low interest rate policy. In Washington, yesterday, June 16, the Fed announced its interest rate projection, according to which the key interest rate is to be raised in two steps by a total of 0.5 percentage points in 2023. This means that an end to the loose monetary policy that the Fed was imposing in the wake of the Corona crisis by lowering the key interest rate to 0-0.25 percent and monthly purchases of US government bonds and mortgage-backed securities totaling 80 billion is in sight US dollar has manifested. The Fed intends to maintain this quantitative easing policy “until further substantial progress has been made towards the goals of maximum employment and price stability”. However, Fed Chairman Jerome Powell has at least hinted at an end to the massive bond purchases: One should think about an end to the bond purchases, Powell said in a press conference on the Fed projection.
Fed tries to dispel inflation concerns
In the hours after the announcement, not only the US stock indices Nasdaq and S & P500, but also gold and the crypto market for the key currency Bitcoin recorded price losses. James McCann, deputy chief economist at the investment company Aberdeen Standard Investment, told the US news broadcaster CNBC:
That’s not what the market expected. The Fed is now signaling that rates need to rise sooner and faster, with its forecast suggesting two hikes in 2023. This change in stance fits in somewhat with recent Fed claims that the recent surge in inflation is temporary.
In fact, the US Federal Reserve has raised inflation expectations to 3.4 percent by the end of 2021. During the press conference Powell admitted that inflation was higher than expected. However, this is largely due to industries whose supply chains are particularly affected by the pandemic. If, contrary to the Fed’s expectations, inflation continues to worsen, this could play a role in stores of value such as Bitcoin and gold.
Bitcoin course in no man’s land
At the time of going to press, Bitcoin was trading at $ 39,227, around 3.2 percent below the previous day’s level. This means that BTC is still above the exponential moving average of the last 20 days (EMA20). This forms an important support for a renewed attempt at the 40,000 USD. However, it would be premature to speak of a bullish development, as BTC has not yet managed to break above the EMA200 (USD 40,905).
The most likely bullish or bearish scenarios for the Bitcoin price can be found in the current Bitcoin analysis.