Bitcoin price has increased by close to 9% in the last few hours as the broader crypto market recovers. It has crossed the $21K mark again and is currently still going strong. Its price increased by close to 1% in the last hour.
The US dollar index has fallen by 0.85%. The dollar’s show of strength is one of the biggest reasons equities and crypto underperformed. BTC fell by 6% in one day just a few days ago as the dollar soared.
S&P 500 and NASDAQ 100 also soared. Bitcoin, which is strongly correlated to the general market, and especially the tech-oriented NASDAQ, also strengthened as well.
Can The Fed Ruin Bitcoin Price Rally
The Federal Reserve reaffirmed and reiterated its hawkish stance. In his latest speech to Cato Institute, Fed chair Jerome Powell said that the Fed takes responsibility for the price stability in the US. He revealed that the Fed is prepared to take an aggressive stance to combat the sparring inflation.
The likelihood of an unusually large interest rate hike from the Fed increased after Powell’s speech. Powell believes that inflation does not need to just be curbed, but also curbed fast. Otherwise, people can accept the high prices as simply the new normal. The Fed would consider such a scenario to be the worst-case possibility.
The CME Fed Watch tool is showing an 85% likelihood of a 75 bps hike. It is also important to note that the Fed is unlikely to pivot from its stance after the hike. In a recent speech, the CEO of the Cleveland Federal Reserve, Loretta Mester, believes that the Fed will need a target rate of over 400 bps to combat inflation. The current target rate is 225-250 bps.
Key Event To Watch For
Investors will look at the Consumer Price Index data to be released on September 13th at the FOMC meeting. A favorable CPI can push Bitcoin to new highs as a 75 bps hike In September already looks priced in.