• Bitcoin prices have been sensitive to inflation readings, with news that inflation fell in December 2022 triggering a bull run.
• Following the Federal Reserve’s (FED) decision to raise interest rates, BTC and crypto prices initially fell.
• However, Bitcoin prices rallied from $22,780 to over $23,500 after Jerome Powell’s press conference, confirming that inflation has been improving and providing insight into the central bank’s monetary policy stance going forward.
Bitcoin prices have been highly responsive to inflation readings in recent months, with news that inflation fell in December 2022 sparking a bull run among cryptocurrency investors. As the Federal Reserve (FED) implemented a rate increase, pushing the current fund rate to 4.75%, BTC and crypto prices initially dropped. Nevertheless, this decline was shortly reversed following Jerome Powell’s press conference, wherein he provided insight into the central bank’s monetary policy stance.
Powell relayed what was mostly expected by traders and investors, confirming that inflation had been improving, excluding housing. This news prompted a surge in demand across the financial markets, including Bitcoin, with prices rising from $22,780 to over $23,500, adding about 3.5%. His comments on inflation and labor expectations, as well as the route the central bank plans to take in the coming months, further supported the rally.
The FED’s decision to raise interest rates, as well as the chair’s confirmation of inflation improvement, provided the necessary catalyst for Bitcoin’s bull run. Investors have taken this as a sign of optimism for the cryptocurrency market, with many predicting that the end of the FED’s hawkish regime could soon be in sight. With BTC prices continuing to rise, it appears that this optimism is well-placed.