- The FOMC increased interest rates by 0.25, leading to BTC’s price drop
- On-chain analysts and Bitcoin maximalists maintained a bullish stance
Bitcoin’s [BTC] price fell below the $28,000 threshold following the release of the U.S. Federal Open Market Committee (FOMC) decision on interest rates. The FOMC is the country’s Federal Reserve division responsible for evaluating price stability, economic conditions, and setting monetary policy.
Read Bitcoin’s [BTC] Price Prediction 2023-2024
March 22’s outcome was, however, expected, as the Fed committee raised interest rates by 25 basis points (BPS). Before the decision, the committee chair Jerome Powell projected a possible 50 BPS, according to Bloomberg.
Decision factors in the banks as…
However, this was before the crashes of SVB, Silvergate, and Credit Suisse. Nevertheless, the hawkish conditions did not stop Bitcoin from maintaining a bullish streak for a considerable number of days.
Regardless, the FOMC admitted that even though inflation has remained high, the recent bank collapses could lead to stiffer macroeconomic variables. Although the Fed mentioned that the banking system was safe and sound, Powell conceded that the committee was unsure about the extensive effect of the institutional failures.
Did you miss Federal Reserve Chair Jerome Powell’s conference?
Here are the highlights 👇 https://t.co/TugPYC89bc pic.twitter.com/8XcEWg9QDz
— Bloomberg TV (@BloombergTV) March 22, 2023
The statement read:
“Recent developments are likely to result in tighter credit conditions for households and businesses and to weigh on economic activity, hiring, and inflation. The extent of these effects is uncertain.”
The policymakers’ settlement is the second significant external decision that has impacted BTC in recent times. About a week ago, the Consumer Price Index (CPI) dropped 6% after it was 6.4% in February. But the difference between last week’s event and this was the contrasting BTC response since the CPI laid the groundwork for the coin to break $26,000.
Meanwhile, several analysts had remained enthusiastic about Bitcoin’s performance prior to the announcement. For instance, Bloomberg’s aggregate analysis of the market predicted a better second-quarter performance for BTC.
Bitcoin is hurtling toward a quarterly gain bigger than any since the start of 2021 and key charts suggest the token has scope to keep climbing https://t.co/x2kmXu2N4F
— Bloomberg (@business) March 22, 2023
No matter what, BTC bulls maintain the mandate
Cathie Wood, CEO of ARK Invest and an extreme believer in the Bitcoin movement, doubled down on her opinion that BTC was a safe haven in the current economy.
“The Fed just voted unanimously to raise interest rates. Some data upon which it might want to depend: bank credit default swaps, bank deposit flows, Bitcoin (flight to safety?), yield curves, commodity prices, housing prices, and consumer sentiment.”
Notwithstanding, stock-to-flow creator, Plan B, seems to be unconcerned by the BTC response to these macroeconomic factors. Instead, he pointed out notable on-chain observations.
Realistic or not, here’s BTC’s market cap in ETH’s terms
According to his latest tweet, Bitcoin was now above the two-year realized price. This data implied that several investors of the past few years are now in profit except for those who majorly accumulated in 2021.
Like clockwork (2Y realized is $31k..) pic.twitter.com/V7Ufl03okt
— PlanB (@100trillionUSD) March 22, 2023
In addition, he responded to comments under the tweet, saying he expected a 25% to 50% adoption rate after the 2024 halving. As he mentioned before, the event could push BTC to a new ATH.