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Bitcoin rose above the $29,000 mark after the Fed’s 25 basis point rate hike, a sign that the asset could decouple from equities.
Bitcoin jumps despite Fed announcement of rate hike
According to network analytics firm Santiment, the cryptocurrency market has shown some promising upside potential since the announcement of the rate hike.
Last year, interest rate hikes by the US Federal Reserve (the “Fed”) usually caused market panic as prices for coins like Bitcoin and Ethereum plummeted after them.
This was because the sector had a high correlation with US equities during this period, meaning that asset prices in the two sectors moved in a similar manner.
However, things are changing for the better lately as the cryptocurrency and stock markets are increasingly separated. The initial price reaction of assets such as Bitcoin and Ethereum to the latest announcement was also a positive sign of this.
Here is a comparison of BTC, ETH and S&P 500 published by Santiment an hour after the FOMC meeting:
It looks like BTC hasn’t changed much since this event | Source: Sentiment on Twitter.
As shown in the chart above, the S&P 500 fell shortly after the rate hike, while BTC and ETH remained stable, indicating a gap between the two sectors.
Since then, both Bitcoin and Ethereum have surged within hours, breaking through the $29,000 and $1,900 levels, respectively. This could be a sign that investors are feeling at ease when the meeting is over.
“At least for now, it seems that the initial reaction to this interest rate hike was, “At least it’s over with. Cryptocurrency no longer needs to worry about fiscal policy until June,” notes Sentiment.
On-chain data also shows that trading volumes for the top cryptocurrencies by market capitalization have risen since the meeting, indicating increased activity in the sector.
BTC price has risen since the announcement | Source: Sentiment
Another metric, “active addresses,” which measures the daily total number of unique addresses that take part in certain transactions on the Bitcoin blockchain, also saw a spike after that day of the Federal Open Market Committee (FOMC) meeting. below are the highlights of the chart.
During the last day, the value of the indicator has been growing | Source: Sentiment
This metric gives an estimate of the total number of unique users who are using the network right now, so an increase in it indicates that a lot of traffic has visited the network in the last day.
The latest spike in active bitcoin addresses is the highest it has been in two weeks, with the spike from two weeks ago mostly due to the sharp drop in price.
“This rally seemed to have a lot more to do with the fact that the rate hike was finally official, and you can see active addresses surge even higher immediately after the announcement,” the analytics firm explains.
Bitcoin Price
At the time of writing, Bitcoin is trading around $29,200, up 1% over the last week.
BTC has risen over the last day | Source: BTCUSD on TradingView