Fed Raises Interest Rates: Bitcoin Volatility Follows

• The Federal Reserve (Fed) announced a 25 basis point hike in interest rates on Wednesday, March 22nd, prompting a $300 increase in Bitcoin’s price within 5 minutes.
• This decision was expected by many in the financial markets, though it is an attempt to quell inflation and bring CPI back to its 2% target.
• Following the announcement there were $19.64 million in liquidations within the past hour according to Coinglass.

The Fed Hikes Interest Rates

The Federal Reserve (Fed) has followed through on its plans to quell inflation with an interest rate hike of 25 basis points on Wednesday, March 22nd. This latest move takes the policy interest rate up to a range of 4.75% to 5%.

Effect On Bitcoin Price

The decision notably affected the price of Bitcoin, which pumped $300 within 5 minutes of the announcement. It started trading at $28,216 before rising to $28,417 ahead of FOMC and eventually breaking upwards to $28,752 following the interest rate decision.

Attempt To Rebound Inflation Rate

CPI inflation in February clocked in at 6%, which the Fed seeks to bring back to its 2% target by keeping interest rates high. Former Richmond Fed President Jeffrey Lacker claimed that further rate hikes are necessary for this goal and that the economy still had room for further tightening.

Market Anticipation

Markets had widely anticipated this month’s hike, though they had priced in a 16% likelihood of no rate hike occurring due to fears surrounding US banking sector failures induced by rising rates. However, others contend that the Fed has taken all necessary steps towards maintaining economic stability despite such volatility risks.

Liquidations Following Announcement

According to Coinglass, there were $19.64 million in liquidations within the past 1 hour following the announcement – evidence that investors have been wary even after acknowledging market expectations for this decision