Bitcoin price dropped below $ 11,000 after the Fed announcement yesterday. As the dollar has started to gain value today, experts are trying to explain this decrease in the Bitcoin price with the uncertainty in the markets.
Fed Chairman Jerome Powell said during yesterday’s statement that the rate will not be changed and that the inflation target of 2% is maintained. In this direction, the Fed may allow the inflation rate, which has been below 2% for several years, to increase in the coming years.
How Is The Bitcoin Price Affected?
Bitcoin price dropped below $ 11,000 after Jerome Powell’s statements. One of the main reasons for this decline is the uncertainty in the market, and the statements made by Jerome Powell were that the Fed could keep interest rates low until 2023 to reach the target of 2%. But John O’Connell, one of Garda Capital’s executives, told the Financial Times that the Fed could not follow this inflation policy for so long.
It can be said that this uncertainty creates a certain degree of uncertainty in the markets. If we look at how the markets performed after the inflation announcement;
- S & P500 Index lost 1.55% and Nasdaq lost 1.94%,
- The US dollar has started to gain in value (we can see this with the exchange rate increasing to 7.54),
- The Bank of Japan also decided not to change interest rates and Nikkei lost 0.67% in value,
- We can see that the Bank of England has announced that it will keep the interest rate at 0.1%.
Although Bitcoin is expected to gain value with the increase in inflation rates, it is known that there is a strong correlation between Bitcoin and the S & P500. Although the Fed’s interest announcement may result in the Bitcoin price rising in the long run, the fall in stock markets may have triggered a pullback in the short term.
Expected to Rise in the Long Term
Although the Bitcoin price has moved back to the $ 10,800-11,000 region for now, experts think that the Bitcoin price may rise in the long term. We can list a few of the arguments offered by these names as follows:
- MicroStrategy bought another $ 175 million Bitcoin and increased its total reserve to $ 425 million.
- According to the share of CryptoQuant, the trade volume of Bitcoin has started to grow.
- The number of active addresses has reached the highest level that has been met since 2017.
- The possibility that both individual and ‘whale’ investors have entered into an accumulation process.
- Grayscale, who made a general assessment for Bitcoin, commented that the market is currently “reminiscent of the early 2016”.