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The price of Bitcoin fell sharply following the decision of the Federal Reserve announcement that he would raise interest rates by 75 basis points to fight skyrocketing inflation.

The largest cryptocurrency by market capitalization fell below $19,000 after the announcement before bouncing back amid widespread market volatility. It is now trading at around $19,039, down around 1% in the last hour. Bitcoin is also down about 5.7% in the last seven days.

Market analysts were expecting the Fed to raise interest rates again today, this time between 75 and 100 basis points. Bitcoin, other cryptocurrencies, and stocks seem to have mostly priced in those expectations this week, though that didn’t stop nervous traders from selling lower today. Shares also fell after the news, with the Dow Jones and S&P 500 both down around 0.70% at the time of writing.

The price of Bitcoin as the Fed announced its latest rate hike. Image: CoinGecko

Central banks, not just the Federal Reserve, raised interest rates to control soaring prices. The Fed has been particularly aggressive in its approach as U.S. inflation hit its highest level in four decades, leading investors to turn to safe havens like the U.S. dollar and avoid assets. risky” such as stocks and crypto.

In fact, this year Bitcoin has traded the most like a tech stock, according to data from Arcane Research. It’s also been beaten: It’s currently down 70% from its November 2021 all-time high of $69,044.

As the dollar rose steadily – and today was no exception: before Fed Chairman Jerome Powell spoke, he had already hit a new high in two decades, partly prompted by Russian President Vladmir Putin’s decision to up the ante in Ukraine.

Edward Moya, OANDA Principal Market Analyst for the Americas, said Decrypt that it was a “troublesome market environment” but there was light at the end of the tunnel. “I think for the most part, a lot of Wall Street expects the Fed to stay committed to fighting inflation, which is tough for risky assets, like crypto,” he said. he declares.

“It’s a wait-and-see approach: Long-term investors are still committed to crypto and they won’t be fazed by today’s decision; they anticipate that crypto will trade on its own fundamentals, ultimately, not like tech stocks,” he added.

Darius Sit of Singapore-based crypto investment firm QCP Capital said Decrypt that although Bitcoin trades as a “macro risk asset”, it could “break that correlation” in the future.

Ethereum, the second-largest digital asset, did not fare much better after the Fed’s policy decision. The asset is down 1% in the past 24 hours, trading at $1,328.

The asset, which despite finish a long-awaited and highly publicized transition to a proof-of-stake blockchain last week, has struggled to gain momentum: in the past seven days, its price has fallen by 15%.

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