Bitcoin reached the 6-month high following the FOMC meeting on February 1. The top crypto broke the $23,000 resistance mark and surpassed $24,000 after the United States Federal Reserve (Fed) confirmed the new interest hike.
Accordingly, Chairman Jerome Powell said that Fed decided to raise interest by 25 basis points (25%), making the benchmark rate increase approximately 4.75% – the highest since October 2007.
It’s also the eighth time the Fed has raised the interest rate. But it’s definitely not the last time.
Powell highlighted in the FOMC meeting that the ongoing interest rate hike would be in sight until inflation was in control. Experts predict that the Fed will likely increase the rate at least 2 or 3 times before deciding to lower the rate.
A Rising Rate
The Fed’s decision fell just right into the market’s expectation. The crypto market reacted positively shortly after the announcement with green spreading across top projects.
Bitcoin was up to $24,255 in the day before falling back around $23,000. Ethereum jumped above $1,600 while other altcoins saw significant increases in 24 hours.
Cardano (ADA), an altcoin which has recently gained traction, also saw price jumping by 4%. The crypto community is quite bullish on the price surge of ADA this month since Cardano’s stablecoin Djed went live earlier this week.
The market has shown signs of recovery after closing the first month of the year with outstanding performance.
Bitcoin’s cap value has surged by 39% so far in 2023. Historical data shows the fact that luck seemingly smiles on the crypto market in February, many investors expect Bitcoin and other crypto projects can extend their bullish days.
New Bull Run?
Controversy on the prolonged crypto winter has been constant under the influence of macro conditions and a series of insiders’ financial crisis last year.
Some experts say that the signs of the crypto winter extending are there, while others believe this is only a small fluctuation. So far from the current circumstances, even if it looks like a return to crypto winter in 2018, the market seems to mature much.
The setbacks over the past few months indeed left a positive impact on the market as a whole as disqualified projects were filtered, likely turning the market into a much healthier ecosystem.
Besides, Bitcoin advocates are looking for the next Bitcoin halving scheduled for 2024. The event is expected to drive the price up as previous times.
The three first halving in 2012, 2016, and 2020 saw the Bitcoin drive skyrocketing over 9,9%, 2,9%, and 665%, respectively. The price surge remains a question for the next halving but still, it is the major event that could significantly affect the whole market.
The maturity of the crypto sector also raises concerns about regulatory oversight.
Will authorities around the world increase crypto surveillance and investigation activities in the face of rising interest rates, soaring inflation, and a protracted global economic downturn?
Yes, but the outcome may be unpleasant for the crypto community.
The United States Department of Treasury’s Office of Foreign Assets Control (OFAC) previously blacklisted two cryptocurrency wallets. The authorities said that these wallets were linked to a group of Russian sanctions evaders led by Jonatan Zimenkov.
Igor Vladimirovich Zimenkov’s son, Jonatan Zimenkov, allegedly works with his father to run a sanctions-evading network that delivers high-tech equipment following the Russia-Ukraine conflict. It was also previously alleged that Russian enterprises used Bitcoin to avoid Western sanctions.
Russia will very certainly conduct digital currency transactions with numerous worldwide institutions, given this sector is not supervised by central banks.
After its soldiers overran Ukraine’s border, the United States, the European Union, and a number of other countries slapped sanctions on Russia.
The OFAC’s move reignites community worries about privacy. Last year, the agency took a similar step with the Tornado Cash protocol, resulting in the entire freeze of consumers’ assets on the platform.
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Author: Nicholas Say