Bitcoin: expected bloodbath according to Fed assessment will not be forthcoming

Deepak Gupta January 14, 2022
Updated 2022/01/14 at 9:35 AM

Over the past few weeks, the Bitcoin-Let course be influenced by some events. At the forefront was the new mining ban imposed by the Kosovo government. Investors are now primarily concerned about the announced decision by the US Federal Reserve (Fed). In response to the massive inflation, it plans to raise interest rates quickly. However, the feared price crash as a result of initial assessments has not yet materialized.

Bitcoin initially “stable”

On Thursday, Lael Brainard signaled that the US could expect a rate hike in March. According to the member of the Fed’s board of directors, the reason for this is inflation, which is currently becoming more and more entrenched. Diane Swonk, chief economist at Grant Thornton, said the day before that the Fed was seriously concerned. The central bank is “in panic mode”, quoted the Handelsblatt. This increases “the risk that it will raise interest rates too much”. In Swonk’s eyes, this development is “worrying”.

But although assessments like these have been circulating for a good week, Bitcoin has shown itself to be relatively unimpressed for the first time in a long time. In the past 24 hours, the price has lost just 0.22 percent, and in a weekly comparison even gained about 0.59 percent. Fear of the apparently near end of the Federal Reserve’s loose monetary policy had led to losses in various risky assets, including crypto currencies, over the past few weeks. Currently, however, these fears seem to be gradually receding into the background, notes the business magazine Bloomberg.

Fear decreases, hope increases

Even the Fear & Greed Index has recovered slightly from last week. According to the indicator, investors are still “extremely afraid”, but the situation could calm down further in the coming days.

However, it remains to be seen what the Fed will ultimately decide on in March. Short-term recoveries at least suggest that Fed chairman Jerome Powell will not have to raise key interest rates as much as initially feared.

Sources: Handelsblatt; Bloomberg;

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