Following a meeting of the Federal Open Markets Committee on Wednesday, during which the U.S. central bank decided to increase its benchmark interest rate by 0.5%, bitcoin experienced increased volatility.
The Fed has finally taken action this year to slow the hawkish momentum of monetary policy, and the announcement, which was in line with market expectations, represents that.
At 14:00 EDT, when the Federal Reserve announced its decision, Bitcoin immediately dropped from $18,300 to $17,850 in less than five minutes.
Shortly after, the asset changed direction and was currently trading for $17,960.
Data from CoinGlass shows that the cryptocurrency market movement contributed to $44 million in liquidations over the course of the previous day, the majority of which came from Bitcoin trades.
The biggest single liquidation was a $1.04 million trade between ETH and BUSD on Binance.
According to the CME’s FedWatch tool, the market had a roughly 80% chance of a rise of 50 basis points going into the meeting and a 20% chance of a fifth rise of 75 points. If the aforementioned is accurate, the central bank’s target rate ranges from 4.25% to 4.5%.
In an effort to combat record-high CPI inflation, the Fed raised rates continuously throughout 2022. Market participants anticipate a slowdown in the hikes in 2023 because November’s inflation data indicates that their efforts are having an impact.
Other central banks in large numbers also seem to be reeling in rates. In October, the Bank of Canada announced a 50 basis point increase, and the Bank of England did the same in September.
Since several months ago, the United Nations has been putting pressure on the Federal Reserve to stop raising interest rates, citing the possibility of a global recession. In fact, a number of businesses in the cryptocurrency sector have already had to implement mass layoffs this year, frequently in response to macroeconomic worries.