Cryptocurrencies prices climbed after the US Federal Reserve raised interest rates by 75 basis points for the consecutive second month to tackle high inflation.
Bitcoin jumped 7.5 per cent to trade at $22,965.5 today while Ether soared 11.14 per cent to trade at $1,624.9 after being pummelled by the crypto crash and investor uncertainty.
The Fed hiked rates by as much as expected amidst fears that the central bank’s hawkish actions may plunge the US economy into a recession.
Bitcoin prices had been declining prior to the hike as the “crypto winter” gripped the industry and sent prices of major tokens plummeting.
“Markets have had enough time to digest and fully price in a 75 basis point rate hike. Major crypto assets, including Bitcoin and Ethereum, have actually rallied in the immediate aftermath of the announcement,” said Mikkel Mørch, Executive Director at Digital Asset Investment Fund ARK36.
“This may suggest that market participants were actually quite fearful of the 100 bps and sighed with relief when the raise aligned with the consensus.”
Traders cautiously await the Fed’s announcements, which have drastic impacts on market sentiment.
“Since the next hike doesn’t come until September, there may be some room for upside now, although that will be contingent on the strength of the dollar and the wider macro environment,” Mørch added.