The US Federal Reserve announced an increase in interest rates and the most popular currency in the world, Bitcoin , managed to rise 5% in the last 24 hours thanks to the bearish sentiment gradually diminishing.
Bitcoin hits $40,000 in New York trading as Fed hikes interest rates
Bitcoin (BTC) managed to hit $40,000 on New York trading day. The rise in the value of the cryptocurrency offset a brief period of selling just after the United States Federal Reserve (Fed) raised official interest rates by 0.5%; which means its biggest increase since 2000.
In addition, the Federal Reserve approved a series of plans to start reducing its bond portfolio; which will alleviate the monetary stimulus that has been causing the increase in speculative assets, which includes shares and crypto currencies.
The Federal Open Market Committee, which is in charge of setting interest rates; reported that increases followed by rates within the target range are going to be appropriate. This indicates that there could be another increase at the Federal Reserve meeting to be held next month; although, it is possibly below 0.75 percentage points as expected by several operators.
Rising interest rates could affect asset prices
Normally the increase in interest rates precedes the slowdown in economic growth, this could impact asset prices. However, at a Wednesday news conference, Jerome Powell , the Fed chairman; assured that the United States economy continues to be quite strong and could handle the increase in interest rates without major problems.
While most of the digital currencies traded higher in the last 24 hours, after the behavior of the shares. For its part, gold also rose while the US dollar fell.
The prices of the main crypto currencies were shown as follows: BTC was positioned at $39,878 , gaining 5.70%. ETH reached $2,955 , when it gained 6.59%.
While the daily close of the S&P 500 was at $4,300 , adding 2.99% and gold was placed at $1,886 per troy ounce, gaining 0.90%. And the daily close of the 10-year Treasury yield also added about 2.92%.
Time to take short-term risk
The Bitcoin Fear and Greed Index turned lower in extreme fear territory on Wednesday, signaling a diminished appetite for risk among digital currency investors.
An increase in investor sentiment will necessitate an increase in the price of Bitcoin, with a gradual increase in trading volume and volatility. Daily buying volumes within a positive market signal bullish activity , according to Alternative.me , which builds the index.
BTC dominance, or the market capitalization of Bitcoin compared to the entire market capitalization, accounts for ten percent of the Fear & Greed Index .
Bitcoin is currently above altcoins so far in 2022; however, he gave up some of his supremacy in recent days. Which could indicate an improvement in confidence among traders in the short term . Especially at the moment when stocks and digital currencies are entering a seasonally strong period.