Bitcoin Crashes to $36k as Fed Hikes Interest Rate

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Bitcoin’s price has taken a big hit following the rate hike by the Fed. The market tumbled just hours after the announcement of the hike, bringing Bitcoin’s price to $36,000, the lowest since January 2022. This was the opposite of what the crypto space expected.

The Fed yesterday announced an increase in interest rate by 50%. This is a routine decision taken by America’s apex bank, which it says is an effort towards combating inflation. Such announcements have in the past led to an increase in the price of Bitcoin and while it did lead to a slight increase, this was short-lived as the trend was reversed shortly after.

Bitcoin crashes after rising to $39,000

After many days of sideways movements, Bitcoin finally started going up from $37,000 and almost hit $40,000 for the first time in over a week following the Fed announcement. However, things turned around quickly and the price crashed rapidly to reach $36,322 now.

There have been predictions that the asset may crash to this level where it is likely to find support for a bounce. Some analysts even predicted that the price may go as low as $28,000. At this rate, crypto investors are watching to see what happens as there are chances of the price dropping to lower levels. The drop has been mainly due to capitulation which has been ongoing for weeks.

Bitcoin isn’t the only cryptocurrency dropping, other top cryptocurrencies like Ethereum, XRP and Solana have also crashed significantly, with Solana losing more than 10% of its value in the last 24 hours. Of course this is to be expected as Bitcoin usually determines the direction of movement for these top cryptocurrencies.

What is next?

At the moment, it is not yet certain how low Bitcoin will go before finding support for a potential bounce. Reports show that institutional investors are pulling their investments out of Bitcoin investment instruments, which may have contributed to the crash.

No matter how low it goes though, there is likely to be a bottom and smart investors especially whales may consider this another opportunity to buy more for the next leg up. On the contrary, retail investors are likely to keep panic selling as they try to salvage what little gains they have made during the good days. In spite of all this, the general sentiment for the long term remains bullish.

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