Bitcoin Down is suffering its worst downfall this year after The United States Federal Open Market Committee (FOMC) made a statement that there will be an increase in interest rates.
So on Wednesday The FED officially announced that there will be an interest rate increase of 50 basis points which is nearly around 0.5%. This is the second investment rate adjustment in 2022 and it says there will be nearly more than 5 interest rate increases this year.
The previous Interest rate adjustment done by FED was in March 2022, which was around 0.25%. This was the highest interest rate increase hike since 2000 as well as the US is suffering from the highest inflation rate of 8.5%.
The FOMC made a statement that,
“Inflation is much too high and we understand the hardship it is causing and we are moving expeditiously to bring it back down, United State’s economic activity had edged down in the first quarter and stressed that the inflation remains elevated”.
The FED announced in its policy statement on Wednesday saying that it will begin to sell some of its balance sheet of mortgage-backed securities and bonds which has doubled to $9 Trillion since the beginning of the pandemic.
So mainly this balance sheet sales and interest hike will surely shock the Stock market and the Crypto market. We are recently witnessing the bad impact as Bitcoin is suffering very badly as it is already trading at a price of and at the end of the day stock market also had a bad laugh closing to market in red notes.
This decision made by FED is taken to lower the demands for goods and services. As per simple theory when inflation hits high purchase power decreases and people will suffer buying goods and services. Especially the Russian Ukraine war has made a bad impact world widely increasing inflation rates in many countries.
This might not be the end and economists suggest that they will have another hike of 0.5% in June and there will be more interest rate hikes in 2022. So this is a piece of very bad news for everyone which will surely shock Cryptocurrencies and the Stock market.
