The price of Bitcoin has increased by almost 9% in the last few hours as the crypto market started to recover further. BTC price has crossed the $21K level again and looks to be holding strong for now. The price is up almost 1% in the last hour.
The US dollar index was down 0.85% against six major currencies. The intraday strengthening of the US dollar has been one of the biggest reasons for underperforming equities and cryptos. BTC fell as much as 6% in one day a few days ago as the US dollar surged.
The S&P 500 and NASDAQ 100 also surged. Bitcoin, which is highly correlated with the stock market, especially the tech-oriented NASDAQ, also surged.
The Federal Reserve confirmed and reiterated its hawkish stance. In his recent speech to the Cato Institute, Fed chairman Jerome Powell said that the Fed is responsible for price stability in the US. He revealed that the Fed is ready to take an aggressive stance to combat rising inflation.
The possibility of a big interest rate hike from the Fed increased after Powell's speech. Powell believes that inflation needs not only to be contained, but also to be contained quickly. Otherwise, people can accept high prices as the new normal. The Fed would consider such a scenario a worst-case scenario.
The CME Fed Watch tool shows an 85% chance of a 75 bps hike. It is also important to note that the Fed is unlikely to reverse its stance after the hike. In a recent speech, the CEO of the Cleveland Federal Reserve, Loretta Mester, believed that the Fed would need a target rate of more than 400 basis points to fight inflation. The current target rate is 225-250 bps.
Investors will pay attention to the Consumer Price Index data that will be released on September 13 at the FOMC meeting. A favorable CPI could propel Bitcoin to new highs as the 75 bps rise in September is already showing results.
