The crypto market is sluggish today after the Federal Reserve Chairman Jerome Powell said that interest rates should be hiked more quickly to counter inflation. Powel said that they were considering a 0.5% rate hike for next month.
The development comes after the president of the St. Louis Federal Reserve Bank, James Bullard, said that he expects the interest rate to go to as high as 3.5% by the end of the year.
Following the developments, Bitcoin (BTC) had dropped to $40,515.77 form trading above $42,000 at the time of writing as the rest of the general crypto market traded sideways after retracing to a market cap of about $1.88 trillion.
Make or break level for Bitcoin
Market observers view the $40,000 level as a make-or-break level for Bitcoin arguing that how it performs from there determines whether there shall be another attempt at a bullish trend or the market will turn bearish.
Majority of investors, however, seem to agree that now is the optimal time to invest in Bitcoin since the current surge in inflation has resulted to stocks collapsing and investors are clueless on how fast the central bank intends to hike the interest rates.
Nevertheless, Bitcoin has also been on the receiving end since it has shed about 20% since the beginning of the year. It had plunged to as low as $33,000 towards the end of January registering a drop of more than $35,000 from its all-time high of $69,000 that it set on November last year.
Containing the inflation using rate hikes
The inflation hit 8.5% last month and the central bank intends to raise the interest rates to counteract the rising inflation. There is also a discounted cash flow concept that aims at appraising high-growth investments like technology.
Some of the factors that investors have had to grapple with over the recent past include the rising inflation, geopolitical tensions as well as the central bank tightening monetary policies.
According to the minutes of the March meeting held by the Fed, its intention is to reduce its balance sheet by $95 billion each month.
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