Fed threatens rate hikes, crypto takes a hit — short Bitcoin breakdown
The new Federal Reserve chairman, Kevin Warsh, made it clear he will fight inflation by raising interest rates sooner rather than later. Higher interest rates make risky investments like Bitcoin much less attractive, causing its price to slide back toward $60,000.
Idea
When the Federal Reserve threatens to raise interest rates, investors tend to pull their money out of highly speculative assets like cryptocurrencies because safe government bonds suddenly start paying higher, guaranteed returns. This shift away from risk is dragging Bitcoin down, and fears over the unraveling of a major crypto investment firm's funding model are adding extra panic to the market. With rate hike bets surging and spot crypto ETFs seeing massive outflows, the selling pressure on Bitcoin is likely to continue in the short term.