The Federal Reserve raised interest rates by 75 basis points to a target range of 1.5% – 1.75%. Bitcoin plummeted to as low as $20,392 following the announcement, before rebounding to $22,061 on Wednesday.
The Federal Reserve raised its benchmark rate by three-quarters of a point for the first time in 28 years.
The increase is intended to combat the worst inflation in about 40 years. In May, inflation rose 8.6 percent, exceeding expectations for the first time since 1981.
On Wednesday about 9 p.m. EDT, the Bitcoin market price momentarily peaked at nearly $22,800, but is now trading at roughly $20,900 as of press time.
The Federal Reserve’s main goals are to promote maximum employment, maintain moderate long-term interest rates, and keep annual inflation around 2%.
Higher interest rates help to slow the economy and make borrowing more expensive, causing consumers and businesses to postpone making investments.
As a result, the Bitcoin and altcoin markets may suffer in the long run as investors withdraw risky assets from their portfolios.
The wider cryptocurrency market was under pressure as rumors of Three Arrows Capital (3AC)’s liquidation spread throughout the ecosystem.