How can the US Federal Reserve’s Interest Rate Hike Impact Bitcoin?

• The appetite for leverage in Bitcoin trading has exposed the inherent risks in the market in case of rising interest rates.
• The recent selling pressure has lowered the profitability level. According to Glassnode data, the profitability percentage of Bitcoin addresses is currently 61.47%. This means there is still more room for another collapse.
• Bitcoin whales (shown in green) holding more than 1,000 BTC have slowly started accumulating again since August 19.

Bitcoin price shows a tendency to sustain stable price movements after the drop; will the possibility of the Fed raising interest rates further strengthen the likelihood of a decline in Bitcoin?

Is the Probability of the Fed Raising Interest Rates Strengthening?

The appetite for leverage in Bitcoin trading has exposed the inherent risks in the market in case of rising interest rates. Many traders in the case of BTC are forced to liquidate in order to keep up with their debts due to rising interest rates.

It is not surprising that the decision of the US Federal Reserve to keep interest rates high is associated with the recent downward trend in Bitcoin. Many analysts expect that if the Fed continues to keep interest rates high, the potential rise in Bitcoin will be limited.

It may take some time for inflation levels to drop to appropriate levels. This means that interest rates may not be conducive to a significant rise in Bitcoin (when all factors are held constant).

However, this may be a subject of Treasury bond sales. Such a situation may cause the Fed to intervene and lower interest rates.

Evaluating the Probability of Testing the $20,000 Price Level Again

Bitcoin may have seen excessive selling after the recent collapse, but this does not eliminate the possibility of further negative outcomes. Peruvian Bull’s analysis suggests that there could be another wave of selling pressure before the Fed lowers interest rates.

Can Bitcoin really drop from the current level? The recent selling pressure has lowered the profitability level. According to Glassnode data, the profitability percentage of Bitcoin addresses is currently 61.47%. This means there is still more room for another collapse.

Bitcoin exchange balances have also dropped below June levels, indicating a decrease in market confidence. Despite the above observations and low price, the demand level, especially from whales, is low. A significant price drop usually triggers accumulation and consequently provides short-term relief.

Now let’s take a look at some on-chain findings that suggest there may be some bullish attempts in the next few days. Miner balances have increased, indicating that BTC miners prefer to hodl in anticipation of higher prices. It also means that the situation is not bad enough to sell. Bitcoin whales (shown in green) holding more than 1,000 BTC have slowly started accumulating again since August 19.

Meanwhile, addresses in the 10,000 BTC range have accumulated until August 13 levels. This means they exited before the crash and started accumulating again, indicating that they expect some upward movement. However, these findings are subject to market changes. In this case, announcements related to interest rates should be among the ones to be closely monitored.