OKCoin: Is the Fed's rate hike a pressure or a driving force for Bitcoin?

International Online Internet Finance Channel: The U.S. Federal Reserve announced an increase in the federal funds rate on the 15th (early morning of the 16th Beijing time), which is the third rate hike by the Federal Reserve since the financial crisis. This time, the Federal Reserve announced a 25 basis point rate hike, raising the target range of the federal funds rate to 0.75%-1%, which is in line with market expectations.

Subsequently, the international gold price skyrocketed (the Fed's rate hike was originally bad news for gold): According to reports, the most active April gold futures contract on COMEX had a trading volume of 10,082 lots in one minute at 02:00 Beijing time, with a purchase value of more than 1.2 billion US dollars, causing spot gold to rise by more than 10 US dollars in the short term. As of press time, the international gold price has risen by 22 US dollars, reaching an intraday high of 1,221.72 US dollars per ounce.

However, the trend of Bitcoin, which has similar properties to gold, has not been affected. According to the market data of OKCoin, a well-known domestic Bitcoin trading platform, the opening price on March 16 was 7,998 yuan, and the overall trend was downward. From the daily level of OKCoin, yesterday's daily line closed with a small cross line with a slightly longer shadow, and the closing price stood above MA10, with no signs of increased trading volume; at the 4-hour level, the moving average system (5, 10, 20, 60) was in a sticky state, and MACD was running horizontally near the zero axis, without clear directional guidance. In summary, it is unlikely that the price of Bitcoin will break away from the sideways stage in the short term.

The Fed's interest rate hike is closely related to our daily lives. As the saying goes, one move affects the whole body. The interest rate hike will significantly reduce the stability of the global economy. Let's take a look at the impact of the Fed's interest rate hike on us:

gold

The Fed's interest rate hike is bad news for gold. The prices of gold and silver may fall further after the rate hike decision, but may rebound afterwards. Considering the increasing uncertainty in the global economy, gold's advantages as a safe-haven asset are still very significant.

Bitcoin

It is generally believed that the Fed's interest rate hike is good for the US dollar, and the price of Bitcoin should be under pressure to fall, but historical data shows that this is not always the case. Once the interest rate hike cycle begins, the price of Bitcoin tends to rebound. At the same time, considering Bitcoin's gold-like properties - a safe-haven asset, Bitcoin is still optimistic in the medium term.

Since the Fed announced an interest rate hike at the end of last year, the United States has entered a new round of interest rate hikes. If the Fed raises interest rates again tonight, how will the global capital market prices change? We may be able to find out by looking back at history.

Over the past three decades, the Federal Reserve has experienced five rounds of interest rate hikes:

The first round was from May 1983 to August 1984, with four interest rate hikes, and the benchmark interest rate rose from 8.5% to 11.75%. The US dollar index rose by 15%, the S&P 500 rose by 3.5%, gold fell by 20%, and crude oil fell by 3%.

The second round was from March 1988 to February 1989, with 12 interest rate hikes, and the benchmark interest rate rose from 6.5% to 9.75%. The US dollar index rose by 6.5%, the S&P 500 rose by 10.4%, gold fell by 14.6%, and crude oil rose by 6.4%.

In the third round from February 1994 to February 1995, there were seven interest rate hikes, with the benchmark interest rate rising from 3.25% to 6%. The U.S. dollar index fell by 9.3%, the S&P 500 remained flat, gold fell by 2.7%, and crude oil rose by 18.5%.

In the fourth round from June 1999 to May 2000, interest rates were raised six times, with the benchmark interest rate rising from 4.75% to 6.5%. The US dollar index rose by 8.2%, the S&P 500 rose by 6.8%, gold rose by 5%, and crude oil rose by 54.1%.

In the fifth round from June 2004 to June 2006, there were 17 interest rate hikes, with the benchmark interest rate rising from 1% to 5.25%. The US dollar index fell by 3.3%, the S&P 500 rose by 11.6%, gold rose by 52%, and crude oil rose by 98.4%.

Undoubtedly, the first and most direct impact is on the US dollar exchange rate. The interest rate hike will change the interest rate differential between the United States and other countries, which can push up the US dollar exchange rate. Although the US dollar index weakened after the Fed raised interest rates in 1994, and the US dollar index rose first and then fell after the Fed raised interest rates in 2004, some analysts believe that the probability of the US dollar strengthening this time is extremely high.

The price trend of the US dollar often affects the flow of funds in the entire capital market. Judging from the current performance of global asset prices, commodity assets, safe-haven assets and US stock asset prices have all performed well. The Fed's interest rate hike will undoubtedly have a certain degree of negative impact on the price of US dollar-denominated commodities in the short term.

The prices of the U.S. dollar, gold, silver, Bitcoin, and Treasury bonds, which have safe-haven properties, are generally strong, but the Fed's interest rate hike will cause some safe-haven funds to flow into the U.S. dollar. In other words, the short-term prices of Bitcoin, gold, silver, and Treasury bonds will continue to rise after the short-term decline caused by the Fed's interest rate hike.