Bitcoin (BTC) charged above $22,000 on July 27 after the United States Federal Reserve enacted another major interest rate hike.
Fed: “Appropriate” to keep hiking after July
Data from Valideapp Markets Pro and TradingView showed BTC/USD reacting positively to confirmation that the Federal Open Markets Committee (FOMC) had unanimously voted to hike the Fed funds rate by 75 basis points.
“The Committee seeks to achieve maximum employment and inflation at the rate of 2% over the longer run,” a press release stated.
“In support of these goals, the Committee decided to raise the target range for the federal funds rate to 2-1/4 to 2-1/2 percent and anticipates that ongoing increases in the target range will be appropriate.”
Markets had already expected that 75 basis points would be the Fed’s next move. Commentators, however, increasingly considered the implications of the central bank’s balancing act between taming inflation and avoiding recession going forward.
“Watch the Fed abandon forward guidance and rate commitments and embrace data-dependency. This cycle of hikes ends at 2 pm tomorrow. Buy bonds,” David Rosenberg, founder and president of Rosenberg Research & Associates, stated the day prior.
Looking farther out, meanwhile, Wall Street macro strategist David Hunter forecast continued relief for risk assets. More pertinent was a bet that recent lows would not repeat, a potential boon for Bitcoin bulls given the cryptocurrency’s ongoing correlation to equities markets.
“No matter what the Fed decides today (75 or 100bps), the market is poised for a move higher to S&P 4150–4200 & then maybe a sharp, short pullback to 3800 before a much bigger, more sustainable rally to 6000 gets underway,” he told Twitter followers.
“The lows are in.The market not likely to undercut the June lows.”
At the time of writing, volatility characterized spot markets as BTC/USD flitted around $22,000. Fed chair Jerome Powell was due to begin a press conference at the time of writing, his language apt to add further head or tailwinds to the market trajectory.
“In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in the Plans for Reducing the Size of the Federal Reserve’s Balance Sheet that were issued in May,” the press release additionally confirmed.
Traders bet on a Bitcoin boost
Analyzing the market setup, meanwhile, bullish consensus among traders was palpable.
Related: Will the Fed prevent BTC price from reaching $28K? — 5 things to know in Bitcoin this week
Analyst Dylan LeClair noted long positions building on derivatives exchange FTX in the hours prior to the decision.
Some big $BTC bulls on FTX going into FOMC pic.twitter.com/CWAE0BxGKZ
— Dylan LeClair (@DylanLeClair_) July 27, 2022
As Valideapp reported earlier, the institutional sentiment was seen to be improving over the second half of July, according to research from analytics firm Arcane Research.
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