Bitcoin soared above $22,000 on July 27 after the Federal Reserve raised interest rates by 75 basis points (0.75 percent). At first glance, this is unusual, since an interest rate hike is not necessarily positive for Bitcoin. However, there was a roughly 25 percent chance of a 100 basis points (1 percent) rate hike. So the market apparently sees the 0.75 percent increase as a case of “it could have been worse.”
“The bottom has been reached”
Market analyst David Hunter, a professional with 49 years of experience on Wall Street, believes the Federal Reserve’s choice doesn’t matter much. “No matter what the Federal Reserve decides today – 75 or 100 basis points – the market is poised for an upward move, followed by a small correction, then launching a massive rally,” Hunter said via Twitter.
“We’ve had the lows. The market is not going to drop below the June bottom,” Hunter continues. If it’s up to Hunter, the stock markets are going to explode in the coming months. Given the high correlation between stocks and Bitcoin, that’s good news for the crypto market as well. The bond market seems to agree with Hunter’s reading. They expect a Federal Reserve that is slowly starting to step on the brakes.
What does the bond market expect?
The bond market expects another increase of 50 basis points for September, followed by increases of 25 basis points in November and December. Then start 2023 with a rate cut of 50 basis points. The bond market therefore expects not only a Federal Reserve to step on the brakes, but also a recession to fight against.
The fact that the Federal Reserve will probably have to start cutting interest rates again after a few months indicates how fragile their monetary policy is. Michael Saylor underlines that with the above tweet. “In response to the Federal Reserve meeting, Bitcoin’s monetary policy remains unchanged,” said Michael Saylor. With which he indicates exactly what makes Bitcoin valuable compared to fiat money.
