Why 100 basis point interest rate hike spells doom for Bitcoin and crypto market

The Federal Reserve will likely raise interest rates 100 basis points at its July 26-27 meeting. This would mark the largest increase since it started using overnight rates as its main tool for monetary policymaking back in the 1990s. The high prices are causing concern among the largest economy in the world. Opponents point to the Fed’s lack of action when liquidity dried up in the crypto market.

Bitcoin’s price has shown no signs of strength or recovery. It had been moving in jagged patterns, with very little volatility, except for a few exceptions. The price has fallen to retest $18K, after a brief increase to $21K. This zone also provides psychological support, and coincides with the 2017 high.

According to the US Bureau of Labor Statistics, the Consumer Price Index rose by 1.3% seasonally adjusted over the past twelve months and 9.1% in the last 12 months without being adjusted.

The Consumer Price Index (CPI), which analyzes the change in prices urban consumers pay over time for a basket of consumer goods and services, is a useful tool to help people who don’t know. It is the most commonly used indicator of inflation in America.

Unrest also occurred in the cryptocurrency market as was partially predicted. Surprisingly Bitcoin traded at 20K at the time this article was written, but there were signs of bull exhaustion, as investors push for safe haven currency trading higher than 20-year highs.

Raphael Bostic, Atlanta Fed President, stated Wednesday to reporters in St. Petersburg that everything is in play after US consumer prices rose 9.1% faster than expected in the year through June. When asked if this meant raising rates by one percent, he replied that it would.

After being criticised for its initial slow response, the Fed has now become aggressively anti inflation, agitating financial market and raising the possibility of its policies causing a recession in the USA. It is also likely to keep crypto asset prices under tremendous pressure.

Even the most powerful players begin to worry in the final stages of the crypto bear markets and start to sell their undervalued coins to exit the market as soon as possible.

Many of these large companies are holding on to their coins at loss. Some of them will sell before their portfolios experience even more losses. The Exchange Whale Ratio is a useful statistic to monitor whale behavior. It has been increasing sharply over the past few weeks. This suggests that whales have significantly increased Bitcoin deposits to exchanges.

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