Bitcoin price drops as US hikes interest rates – are they connected?

Posted: 17 June 2021 2:18 am

Bitcoin dips as Federal Reserve chairman Jerome Powell announces interest rate hikes earlier than expected.

  • Bitcoin (BTC) is currently showcasing weekly profits of over 4%.
  • Experts are still not sure how easy it will be to use BTC in El Salvador following the government’s move to accept the digital asset as legal tender.
  • The US Federal Reserve plans to issue two interest hikes by 2023.

After having scaled up to a relative high of $40,000 over the last 72 hours, Bitcoin’s upward momentum seems to have subsided a little bit, with the premier cryptocurrency currently showcasing a 2.8% decline in its value since yesterday. At press time, the worlds’ largest digital asset by total market capitalization is trading at $36,354.

To gain a more holistic view of the industry and where Bitcoin might be headed in the future, Finder spoke with DeFi platform Harvest Finance’s pseudonymous community foreman ‘Red.’ In his view, while the recent adoption of BTC as legal tender by El Salvador President Naib Bukele is a “great news headline,” there are a number of technical aspects related to the move that are still not entirely clear, adding:

“The devil is in the details. What frameworks will they be using? How easy will access and use be for the everyday citizen? Ultimately I ask – is this more of headline fodder than real adoption for every use? Time will tell.”

Also, it should be pointed out that as a result of yesterday’s bearish market action, Bitcoin has proceeded to dip and fall close to a key support level, especially as Jerome Powell, chairman of the United States Federal Reserve, announced the central banking authority’s decision to move forward its plan for two interest rate hikes in 2023.

Following the announcement, Bitcoin, as well as the altcoin market at large, proceeded to showcase a small amount of volatility. The total market cap of the industry fell from $1.68 trillion to around $1.64 trillion. Not only that, even the Dow and S&P 500 experienced monetary pullbacks — of 0.77% and 0.54%, respectively.

How to buy Bitcoin

SEC’s verdict regarding VanEck’s Bitcoin ETF still up in the air

The U.S. Securities and Exchange Commission (SEC) issued a statement yesterday, allowing anyone from the public domain to provide their comments regarding the proposed rule changes surrounding asset manager VanEck’s Bitcoin exchange-traded fund application that has been submitted.

As of Wednesday, a spokesperson for the regulatory body stated that the SEC had yet to arrive at a decision as to whether it was going to approve of VanEck’s BTC ETF. However, as things stand, the commission is open to the idea of asking the public whether they believe VanEck’s above-stated offering could potentially be manipulated or be susceptible to other forms of financial fraud.

Public suggestions will be welcome for 21 days following, which will be published in the Federal Register, and 35 days after publication in the same register for rebuttals. Lastly, it bears highlighting that to date, no Bitcoin ETF has ever seen the light of day in the United States, even though a number of applications from major players — such as Valkyrie Digital Assets and Fidelity Investments — have been submitted with the SEC.

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

Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade. Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

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