Is there a correlation between Fed interest rates and Bitcoin prices?
The interest rate cut is coming. Is it a good thing or a bad thing? Or is the higher liquidity brought by the interest rate cut actually good for the price of Bitcoin? See what intuitive feelings you can find from historical data?
We captured the U.S. dollar interest rate and Bitcoin price curve from 2010 to 2024, and looked at the trend change of Bitcoin price after each interest rate change point.
We can see:
1. 2016-2018: The Federal Reserve began to raise interest rates from 0.5% to 2.25%. During this period, BTC price also experienced significant gains, rising from $500 to nearly $17,000. This shows that at this stage, BTC prices are surging despite rising interest rates.
2. From 2018 to 2019, the Federal Reserve continued to raise interest rates, and the price of Bitcoin fell from a high of 17,000 to around US$3,400. During this period, the Federal Reserve stopped raising interest rates, and the price of Bitcoin rebounded, returning from US$3,400 to around 11,000.
3. 2019-early 2020: The Federal Reserve begins to cut interest rates, from 2.25% to 0.25%. BTC prices fluctuated and fell back during this period.
4. From March 2020 to February 2022, the Federal Reserve maintained interest rates at 0.25%, and the price of Bitcoin rose from around 8,000 to around 61,000;
5. In March 2022, the Federal Reserve entered the interest rate hike cycle again. The price of Bitcoin fell from a high to around 16,000 in the early stage of the interest rate hike cycle, and then rose to around 71,000.
To summarize past data:
The first interest rate hike cycle: BTC first rose and then fell;
The first interest rate cut cycle: BTC goes sideways
The second interest rate hike cycle: BTC fell first and then rose
During both periods when interest rates remain unchanged, BTC will rise;
If nothing unexpected happens, the Federal Reserve will start to cut interest rates in September this year. What do you think the trend of Bitcoin will be like? Fall first and then rise? Or pull up after going sideways?
