Bitcoin and Altcoins Tank Over Hike of Interest Rates Federal Reserve

The U.S. Federal Reserve has announced a 25 basis point (bps) increase in interest rates, which is similar to the increase from the previous month. This follows other increases of between 25 and 75 basis points that were formally announced during the year. The Federal Reserve's Chair, Jerome Powell, had previously stated that rate increases will slow down in March of this year, which satisfied market expectations.

Increases in Rates Over Time

The Fed's most recent 25 bps rate hike is consistent with the one it announced last month, ending the uncertainty and discussion about the likelihood of a 50 bps rate hike. Following the banking crisis that rattled the global market, many also predicted a "no hike" or "zero hike," but the Fed appears to be sticking to its goal of rising interest rates for the foreseeable future.

In March 2022, the Federal Open Market Committee (FOMC) raised interest rates for the first time since 2018. It projected six further hikes in its policy meeting in March, and all of them have since been implemented. The Federal Reserve made its first interest rate announcement since the year 2000 in May, increasing the rate by 0.5 percentage points. This was introduced as a result of the Fed's ongoing policy of tightening the economy.

Market Reaction
The three main U.S. stock indexes, which had been relatively flat before the announcement of the rate hike, rose higher in the immediate aftermath of the news as investors processed the Fed's move.

In the minutes that followed the news, the price of Bitcoin (https://coinpedia.org/price-prediction/bitcoin-price-prediction/) surged from $28,450 to $28,740, while Ethereum, the altcoin with the second-largest market share, saw a 0.50% boost to $1,807. At the time of writing BTC is at $27,674.81 which came down because of the SEC’s action on coinbase. The booming cryptocurrency sector is under strain due to the SEC's case against Coinbase. More than 3% less money is corrected for Bitcoin (BTC) price.

As other altcoins have fallen somewhere between 4-8%, Ethereum price (ETH) has also fallen by 3.50% and is currently trading around $1,741 levels.