🚨 How Much Do US Interest Rates Really Matter to Crypto?

The Federal Reserve's interest rate decisions are pivotal moments for the crypto markets. Since 2022, aggressive rate hikes aimed at controlling inflation have caused significant volatility in digital assets, mirroring the fluctuations seen in traditional financial markets.Analytics from Santiment reveal that this correlation is likely here to stay, establishing a new norm for traders. Each Federal Open Market Committee (FOMC) meeting often results in dramatic market reactions. In 2022, as rates soared from near-zero to 4.50% by December, both crypto and equity markets saw considerable declines, with inflation hitting 9.1%. The preemptive actions taken by traders lead to increased volatility in the days leading up to an FOMC announcement. Analysis indicates a consistent pattern where Bitcoin's price responds sharply to regulation changes and the overall macroeconomic sentiment. For instance, when the Fed raised rates for the first time in March 2022, $BTC fell by 5% within a week. A more severe drop of 18% occurred in June after a 75 basis point hike. Yet, there were also moments of relief; Bitcoin had a 6% surge following another 75 bps increase in September, mainly driven by speculative trading.Fascinatingly, March 2023 told a different story. Following a rate hike, $BTC surged 12% over two weeks as investors anticipated a slowdown in the rate increases. Even more exciting was the 15% rise observed when a 25 bps cut was announced in December. However, after the second FOMC meeting of 2024, where rates were held steady at 5.25% to 5.50%, the coin experienced an 8% dip. On the flip side, a rate cut in September saw a significant 10% uptick within ten days.Recent decisions by the Fed to maintain rates at 4.25% to 4.50% resulted in minor fluctuations for Bitcoin, which dropped below $84,000 before recovering. This resilience can be attributed to expectations prior to the announcement, demonstrating that market participants were not caught off guard. Data showed that large wallets accumulated over 200,000 $BTC ahead of the announcement, indicating whale activity is alive and well. Investors are now hoping for rate cuts in the latter half of 2025, which could potentially breathe new life into the crypto market. While some analysts may believe crypto will eventually decouple from macroeconomic trends, the findings suggest a strong ongoing sensitivity to traditional monetary policies.With this landscape in mind, it’s crucial for investors in Bitcoin, AI tokens, and even memecoins to stay informed and prepared for the impacts of the Fed's decisions on the market.memecoin #crypto #solana #Ethereum #ai #bitcoin #cryptocurrency⚠️ Disclaimer: This analysis is for informational purposes only and should not be considered financial or investment advice. via /r/Blockmandev https://ift.tt/14a3lZb