Bitcoin’s price makes comeback despite Fed announcing potential interest hike in March
With the Federal Reserve looking to hike interest rates soon, the crypto market may face a high degree of volatility in the near term.
- Bitcoin’s market dominance index has risen to 40%.
- Accumulation of the flagship cryptocurrency has started to rise again, with one wallet accruing approximately $1 billion worth of BTC earlier this month.
- The International Monetary Fund recently urged El Salvador President Nayib Bukele to rescind his stance on Bitcoin being considered legal tender within his nation’s borders.
After slipping as low as $33,500 a little over 48 hours ago, Bitcoin (BTC) has made a comeback, wiping out its 5-day losses almost overnight. At press time, BTC is trading at $36,128.
According to crypto data provider Whalemap, if Bitcoin can maintain support above its all-important resistance of $34,000, it might bounce back in the near future. If not, the currency may slide down to its next major price support level of $24,000.
That said, more volatility may be in store for Bitcoin — as well as the crypto market at large — after the Federal Reserve revealed yesterday that it plans to hike interest rates sometime during the first half of March. The Fed is currently fighting a major battle with inflation after having implemented lax monetary policies since Q1 2020 end, resulting in the US consumer price index rising 7% this past December, its highest level since 1982.
Lastly, while the market continues to witness increased turbulence, another solo Bitcoin miner has accrued a block on the Bitcoin blockchain independently, thereby earning a total of 6.25 BTC for his efforts — which works out to over $225K at press time.
BTC accumulation is rising, data shows
After a period of long-term holders offloading some of their BTC via various trading platforms — probably to sell or mitigate their recent losses — it now appears that these exchanges are once again beginning to witness larger outflows than inflows. Throughout December 2021, BTC reserves across 20+ major cryptocurrency exchanges saw their BTC outflows increase from 2.396 million to 2.428 million coins.
This outflow also coincides with tangible on-chain demand from several major investors. For example, Bitcoin’s recent descent to the $33,000 zone was followed by a number of multi-million-dollar BTC buy-ins. One whale wallet, in particular, has accumulated $1 billion worth of BTC, starting from a balance sum of zero over the last month or so.
IMF urges El Salvador to rethink its Bitcoin stance
Amid the ongoing market-wide meltdown, the International Monetary Fund (IMF) has once again urged El Salvador to revert its stance on Bitcoin being considered legal tender within its borders. Again, the finance body noted that continued use of the digital currency as legal money could pose immense risks to the country’s long-term financial stability, integrity and consumer protection policies.
Interested in cryptocurrency? Learn more about the basics with our beginner’s guide to Bitcoin, dive deeper by learning about Ethereum and see what blockchain can do with our simple guide to DeFi.
Disclosure: The author owns a range of cryptocurrencies at the time of writing