How will Bitcoin price be affected by the Fed’s possible interest rate hike?


Bitcoin (BTC) showed a weak recovery on September 21, while the dollar continues to break records before the Fed’s interest rate meeting.

BTC price at $19,000 before Fed decision

BTC, which gained 1.33 percent value during the day, managed to hold on to $ 19,000. On the other hand, the US Dollar Index (DXY) rose to 110.86 points, renewing the record of the last 20 years.

How will Bitcoin price be affected by the Fed's possible interest rate hike?
Daily price chart of BTC/USD pair and DXY. Source: NewsOfFinance

Interest rate hike scenarios

Markets expect the Fed to raise interest rates by 75 or 100 basis points.

A rise in interest rates will likely reduce appetite for risky assets like stocks and cryptocurrencies. On the contrary, the dollar will act as a safe haven for investors avoiding risky assets.

Independent market analyst PostyXBT said that the 100 basis point increase could cause indignation in the Bitcoin market, causing the BTC price to fall below the technical support of $ 18,800. In addition, if the interest rate hike is lower than expected, such as 50 basis points, it seems likely that BTC will recover.

On the other hand, a 100 basis point increase would be pretty bad for the S&P 500. This could mean bad news for Bitcoin, which is directly correlated with stock markets.

How will Bitcoin price be affected by the Fed's possible interest rate hike?
FOMC policy decision scenarios for DXY and SPX. Source: John Kicklighter/DailyFX

44 of 72 economists polled by Reuters said the Fed would decide to raise interest rates by 75 basis points at today’s meeting. waiting.

Will Bitcoin drop to $14,000?

From a technical point of view, if there is a break below the $18,800 support, it could decline to $14,000 in 2022 due to a break in the head and shoulders formation.

How will Bitcoin price be affected by the Fed's possible interest rate hike?
The daily price chart of the BTC/USD pair showing the head and shoulders pattern. Source: NewsOfFinance

On the contrary, with the bounce from the mentioned support, BTC can target $ 22,500 as an intermediate stop.



Soruce : https://tr.cointelegraph.com/news/bitcoin-nuke-warning-as-fed-rate-hike-decision-looms-dollar-index-hits-20-year-high

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