FED Interest Rate Rise - Impact on Bitcoin?
Channel: BTC Lighthouse
Date: 2023-05-04

As expected, the FED raised its target interest rate by 0.25% today. The next meeting is in 41 days on 14th June. From Jerome Powell’s speech, the market is sure that the rate will not be increased in the next meeting. But things are volatile right now and these expectations can change based on inflation data and also the ongoing US banking crisis.   

The Bitcoin price reacted to the news by increasing slightly. Post COVID, Bitcoin was correlated to US interest rates and the US dollar. Red is highly correlated, yellow moderately and blue is uncorrelated. But it’s correlation has been gradually decreasing to being almost uncorrelated. We have seen this happen in the past. During extreme global events, all assets including bitcoin get correlated to the FED interest rates and the US dollar. But as time passes, bitcoin recovers more and starts charting its own path.