• Bitcoin has broken its $23k resistance level after the US Federal Reserve announced the start of the disinflationary process of the US economy, raising the interest rate by another 25 base points.
• The 25 bps hike comes after last month’s December Consumer Price Index report which shows a downward trend in CPI since the Fed’s aggressive quantitative easing measures last year.
• Major indices like the NASDAQ have climbed despite the increase in interest, giving confidence to the financial market.
The US Federal Reserve’s acknowledgement of the disinflationary process taking place in the US economy has caused a ripple effect in the financial markets, with Bitcoin breaking its $23k resistance level and major indices like the NASDAQ rising in the face of the dovish remarks. The 25 base point interest rate hike comes after last month’s December Consumer Price Index report showed a decrease in inflation since the Fed’s aggressive quantitative easing measures last year. Despite this, inflation still stands at 6.5%, higher than the central bank’s target rate of 2%.
At a press conference, Federal Reserve chairman James Powell indicated that the Fed may be winding down its rate hikes because of the slowdown in inflation. Powell said, „We can now say I think for the first time, that the disinflationary process has started.“ This announcement has given confidence to the financial market and led to both Bitcoin and stocks rising in the face of the rate hike. Coingecko has reported that Bitcoin rose 3.2% in the last 24 hours.
The uptick in the financial markets might be the market being overly optimistic about the future of the US economy, taking into account the Fed’s still cautious approach to further rate hikes this year. It remains to be seen how the markets will react to these changes, but as of now, the announcement of a disinflationary process has been a cause for optimism.