Bitcoin’s volatility surged once again following the latest Federal Open Markets Committee (FOMC) meeting. The primary cryptocurrency rose by 2.5% in response to the US central bank’s announcement of another 75 basis point hike to its policy rate.
Trading for only $21,688 at 13:30 EST, Bitcoin quickly pumped to $22,209 at 14:10 EST shortly after the rate hike was announced. As writing time, it trades for $21,905.
The price move is hardly a first: Bitcoin’s price has gone volatile immediately following numerous FOMC meetings throughout the year. At times, the volatility is short-lived; at others, rate hikes have long-standing effects on the crypto and stock markets.
Bitcoin has been tightly correlated to stocks throughout the year (though slightly less so in recent months), especially when responding to Federal Reserve policy. The S&P 500 rose by 1.2% while the NASDAQ 100 pumped by 2.5% on the day.
A sizeable portion of the market began to fear a 100-basis point hike was imminent following the Canadian central bank’s equivalent hike earlier this month. However, most expected a 75-point hike, as indicated by Powell during June’s FOMC press conference.
The Fed’s effort to raise interest rates is to cool the red-hot inflation that’s been plaguing the country throughout the year. June’s CPI report recorded 9.1%, the highest in 40 years – and well above the Fed’s 2% target.
However, fears are also circulating that the Fed’s efforts may plunge the economy into a recession. Multiple major crypto firms have already announced mass layoffs in June, citing macroeconomic pressures as the cause.