Bitcoin headed towards the $24,000 mark for the first time in a few weeks after the Wednesday rate hike and a second straight decline in GDP, and according to CEO & co-founder of Lolli Alex Adelman, this is a good thing for Bitcoin at least in the short run.
“During times of market volatility, Bitcoin is gradually and increasingly being recognized by the market as a secure store of value and source of stability,” he told The New Money. “This period of pressure in the markets will continue to differentiate Bitcoin as unique among cryptocurrencies as a deflationary currency, given its fixed supply and decentralized nature.”
He said as the currently rising inflation continues to push Americans to the edge, we are faced with the irrefutable fact that printing money directly causes inflation.
“Bitcoin is the only currency that fixes the problem of inflation by design,” he added.
Ethereum pumped by more than 15% and Litecoin 10.2% after the rate hike.
The comment by Adelman is among quite a number of them coming from professionals in and out of crypto who view that increase in rate hikes by 0.75% this week could provide a background for Bitcoin price to rise higher in the coming days if not month. By how much is a completely different discussion altogether but those effects were felt this week.
Other experts had predicted that a period of crypto volatility and downtrend would follow after the rate hike.
The interest rate hike was the second one from the Federal Reserve meant to fight off inflation and more hikes appear unavoidable with the current economic situation. It is the largest hike since 1994. And although the latest hike bolded the view among experts that the actions by Fed could slow down inflation, further hikes could be dangerous – they could further weaken equity markets which could later pull down the crypto market. For business, the hike could mean more expensive business debt and bigger monthly payment on variable loans, and even tighter lending requirements for small businesses.
Executive director at Digital Asset Investment Fund ARK 36 Mikkel Morch told The Street that crypto valuations could get some room for an upside movement in the coming days following this rate hike because the next Fed meeting will be in September. The strength of the dollar and wider macro environment would play a factor in this.
Morch, however, warned that further hikes could bring down the valuations. For instance, he said, a further rate hike by 0.5% or 0.75% could trigger a sharp sell-off in risk assets.