After the recent meeting of the Federal Free Market Committee, the American Federal Reserve yesterday announced its plan to maintain its rate of federal funds unchanged at 4.25% to 4.5%. Each FOMC meeting influences Bitcoin prices, sometimes causing major oscillations. In the past 24 hours, the BTC price has increased 3.1%. This report examines increases in past rates, how Bitcoin reacted and what traders can expect in the future. Ready? Immerse!
How the increase in Fed rates rescued Bitcoin: an overview
In April 2022, the interest rate of federal funds was as low as 0.5%. It was in May 2022 that the United States Fed decided to review its interest rate policy. The main reason was that the inflation rate had reached up to 8.6% in May 2022. In June, the inflation rate hit a peak of 9.1% – the highest in a decade.
Between May 2022 and July 2023, the United States Fed regularly pushed the interest rate. In July 2023, he reached 5.5%. The level remained unchanged until August 2024.
In August 2024, the inflation rate fell to 2.5%. In fact, between June 2022 and June 2023, the rate decreased in a coherent manner.
It was in September 2024 that the United States Fed reversed its position on interest rate policy. In September, the interest rate increased from 5.5% to 5%. In November, it was reduced to 4.75%. In December, for the third time in 2024, it was reduced to 4.5%.
Bitcoin’s response to recent FOMC meetings
During the FOMC meeting in March 2024, the United States Fed decided to maintain the interest rate unchanged at 5.5%. Initially, the Bitcoin market reacted positively, pushing the price to a new ATH. In April 2024, the market moved laterally, trading in a range of $ 71,000 and $ 61,000.
At the FOMC meeting in May 2024, the Fed showed no interest in making changes. The BTC market has shown small signs of recovery.
During the FOMC meeting in June 2024, even if the Fed recognized the moderation of inflation, they decided to maintain the unchanged interest rate. At one point in June 2024, the BTC price dropped as low as $ 58,360.67.
At the FOMC meeting in July 2024 too, the Fed refrained from modifying. The BTC market fell sharply after the meeting. At one point on August 5, it fell to a hollow of $ 48,919.60.
During the September 2024 meeting, the Fed reversed its interest rate policy. It has reduced the rate of 25 base points to 5%. Within ten days following the meeting, the price of Bitcoin climbed 10%. This marked the start of a new bull on the market.
During the November 2024 meeting, the Fed implemented another reduction of 25 base points. November 2024 was a fantastic month for BTC. A favorable macroeconomic and political environment, fueled by Donald Trump’s victory in the American presidential election, contributed to the strong growth of Bitcoin.
During the meeting of December 2024, the Fed reduced the interest rate to 4.5%. It was the third and last reduction implemented by the Fed in 2024. In December, the BTC price affected a new 108K ATH.
At the FOMC meeting in January 2025, the Fed returned to its “Wait and Watch” policy. It maintained the interest rate unchanged at 4.5%. In January 2025, the Bitcoin market lost the bullish momentum, which had helped the asset reach its $ 109,000 ATH.