Let’s focus on the impact of **interest rates** set by the US Federal Reserve (Fed) on the price of Bitcoin.
### **Impact of Fed Interest Rates on Bitcoin:**
#### **Current Context:**
The Fed has used interest rates as a primary tool to control inflation in the U.S. If inflation is high, the Fed can raise interest rates to cool the economy, making credit more expensive and, consequently, reducing consumption and investment.
#### **Effects on Bitcoin:**
1. **Attractiveness of Risky Assets:**
- **Rising Interest Rates:** When the Fed raises interest rates, safe assets like government bonds become more attractive compared to risky assets like stocks and cryptocurrencies. This is because investors can earn decent returns with lower risk, which can result in capital migrating from Bitcoin to these safer investments.
- **Decreased Liquidity:** Rising interest rates also reduce liquidity in the market as credit becomes more expensive and scarce. Lower liquidity could mean lower demand for Bitcoin, putting downward pressure on its price.
2. **Opportunity Cost:**
- **Bitcoin vs. Traditional Investments:** With higher interest rates, the opportunity cost of holding Bitcoin increases, as investors could earn more by holding interest-bearing assets like bonds. This could reduce the demand for Bitcoin, leading to a potential price drop.
3. **Indebtedness and Investment in Cryptoassets:**
- **More Expensive Financing:** If the Fed raises rates, the cost of financing for individuals and businesses looking to invest in Bitcoin through credit increases. This could lead to a decrease in financed purchases of Bitcoin, further reducing demand.
#### **Chart-Based Projections:**
Considering the graph you provided:
- If there is an expectation of rising interest rates, Bitcoin price may face resistance in the upper zones near $60,000, with a higher probability of testing the lower supports.
- If the Fed continues to hike rates, we can expect increased volatility in the cryptocurrency market, possibly forcing the price to break the support around $57,182.28.
### **Conclusion:**
The interest rate aspect is critical to the behavior of risk assets like Bitcoin. If the Fed continues to raise rates to control inflation, we could see continued downward pressure on the price of Bitcoin, particularly in the short to medium term contexts, as shown on the 4-hour chart.
Continuous monitoring of Fed decisions and analysis of market reaction is essential to any Bitcoin investment strategy during periods of monetary adjustment.
