Bitcoin maintains $40K support as Fed confirms rate hike in 4 years

Bitcoin (BTC) held $40,000 on March 17 after an expected hike in key Federal Reserve interest rates sparked a strong reaction.

BTC/USD 1-hour candlestick chart (bit stamp). Source: TradingView

Fed singles out war in Ukraine in inflation comments

Data from Coin-Crypto Markets Pro and Trading Display showed that BTC/USD climbed to local highs of $41,500 after the Fed announced a 25 basis point hike to 0.5% – the first such move since 2018.

The Federal Open Market Committee (FOMC) voted almost unanimously in favor of the increase, with a accompanying statement warning of continued “upward pressure on inflation”, mainly thanks to the war in Ukraine.

“Russia’s invasion of Ukraine is causing enormous human and economic problems,” it read.

“The implications for the US economy are highly uncertain, but in the near term the invasion and related events are likely to create additional upward pressure on inflation and weigh on economic activity.”

Going forward, there would be further increases, the FOMC continued, and the Fed would begin reducing its asset positions in a bid to shrink its record-high balance sheet.

“The commission’s assessments will take into account a wide range of information, including readings on public health, labor market conditions, inflationary pressures and expectations, and financial and international developments,” the statement added about possible future policy changes.

After its initial bullish reaction, Bitcoin consolidated higher overnight and was still circling around $41,000 at the time of writing.

For CoinTelegraph contributor Michael van de Poppe, the area just below $40,000 was now essential to support.

“The good response from the markets here where it broke through $39.6K,” he said told Twitter followers on the day.

“Then the question will be whether we can sweep the $42K high. That would open the gates to the $46K barrier. Crucial to hold; $39.6K area for Bitcoin.”

Those levels were already well established as rungs on the ladder spanning Bitcoin’s 2022 trading range between $33,000 and $46,000, with one analyst this week arguing that only a move beyond the upper or lower bound would be significant.

Asian markets continue to gain from China’s commitments

Optimism persisted in traditional markets as well, with China fueling a comeback for Asian equities with promises of favorable policy changes.

Related: Ukraine’s President Signs Law Establishing Regulatory Framework for Crypto

Hang Sang Tech Index jumps 7.8% to prolong recovery after Beijing capitulated to mkts, commentator Holger Zschaepitz In summary

“In the past, China didn’t care if Western investors couldn’t invest there. But it does need capital, and it doesn’t have to collapse. So on Wednesday, it was announced that China would be MKT-friendly.”

Gold also looked promising, reversing some of its comedown from previous highs above $2,000.

XAU/USD 1-day candlestick chart. Source: TradingView

Leave a Comment