Bitcoin breaks $24K ceiling after 25 basis point rate hike

Although crypto investors had been expecting a 25 basis point rate hike and the Fed had announced further increases, cryptocurrencies rose, especially Bitcoin, which was trading at $24,000 at one point Wednesday.

After struggling to hold above the $23,000 mark last week, bitcoin surged after the Federal Reserve interest rate hike announcement. According to CoinMarketCap, BTC is now trading at $23,783, up 2.94% in the last 24 hours. In 2023, BTC peaked at $24,100 for the first time and has only declined slightly since then.

Overall cryptocurrency market reacted positively to the news, gaining 3.81% in the last 24 hours, and now stands at $1.09 trillion.

One particular detail may have caused the positive movements in the cryptocurrency market. Federal Reserve Chair Jerome Powell said inflation in the United States is starting to slow. This is the eighth consecutive time the Federal Reserve raised the interest rate by 25 basis points.

During the Feb. 1 Federal Open Market Committee press briefing, Powell said:

We can now say, I think for the first time, that the disinflationary process has started […] we see it really in goods prices.

To clarify, disinflation means that the pace at which prices are going up is slowing down instead of prices actually falling, which is called deflation. The Federal Reserve is still aiming to bring inflation down to 2%, down from 6.5% in December.

At the moment, it’s unclear whether BTC will rise above the current trading mark, fall, or stay the same. Some crypto market observers believe the bitcoin price will decline, while others are bullish, highlighting the Fed’s last two moderate rate hikes.

CoinDesk Indices Managing Editor Jodie Gunzberg said:

Historically, as interest rates rise moderately, as opposed to aggressively the average returns and bitcoin increase massively, more so than traditional assets since the speculators return quickly to buy as the credit and money become more available.