Can BTC keep up with another Fed rates hike?

[Majestic-milf]

 The Federal Reserve has come up with plans to raise interest rates again after doing so three times this year.
The Nation's Central Bank is expected to lift the benchmark Fed funds rate by 0.75 according to CME Fed watch
 
The Fed have been raising these rates aggressively in a bid to beat inflation, with some expecting the economy to enter a recession. Despite the previous rate hikes, economists predict that this may not be the last rate hike for this year because inflation has hit a 9.1% since June and assets like the cryptocurrency have not been left behind.

 Cryptocurrency have been dubbed the "cure-it all for what ails you" as it has helped to curb inflation, low interest rates, lack of purchasing power and what not. This was all when it was in it's high tho.
 With the way rates are going up, is it advisable to buy and hodl or to apply DCA to buy at intervals as price keeps fluctuating? Fed rates hike link

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[NotATether]

Cryptocurrency have been dubbed the "cure-it all for what ails you" as it has helped to curb inflation, low interest rates, lack of purchasing power and what not. This was all when it was in it's high tho.

If people ever stop to listen to a forum post, then I'll just say stop treating BTC as an inflation *hedge* (it's not a hedge), and start seeing it for what it really is - an inflation-resistant currency. Emphasis on the word "resistant" - it does not care about the price movements of other assets!

[Welsh]

NotATether nails it right on the head. Bitcoin doesn't have to keep up with other currencies. However, it's almost guaranteed that fiat will continue to be subject to inflation, while Bitcoin will eventually become either deflationary or very marginally inflation resistant. That's the way it's designed. Now, we currently see quite a lot of volatility, but when block rewards are either very very low or completely gone, that should also bring the volatility down. At the moment, we do see a little bit of inflation since we're introducing new Bitcoin into circulation, although note that isn't being printed off like traditional fiat currencies, instead it has already been pre allocated.

So, we theoretically know how much Bitcoin that'll exist, and we know that beyond a certain point inflation should be a thing of the past, if you're using Bitcoin. However, that's not to say that'll it'll "keep up" with inflation hikes in other currencies, and nor is it expected too.

[davis196]

 Emphasis on the word "resistant" - it does not care about the price movements of other assets!

[/quote]

Bitcoin isn't supposed to "care" about the movements of other assets, but the Bitcoin traders/investors are the ones who care.
The market is created by people and most of them act emotionally. The Bitcoin market isn't different. When there are pessimistic news and FUD, the BTC market reacts. When the stock markets goes down, the crypto market goes downs as well.
I wouldn't call the most volatile financial asset "resistant". Volatility and resistance are two completely different things.
Interest rate hikes will definitely cause the crypto winter to take longer. We need fresh newly printed money, in order to pump the Bitcoin/crypto prices. I'm sure that Bitcoin will survive the Federal Reserve interest rate hikes, and I'm sure that the Federal Reserve doesn't want a long term recession. That's why the interest rates might be lowered after a year or two.

[Heisenberg_Hunter]

From an economic standpoint, Bitcoin was created to minimize the inflation with a fixed supply and thereby increase the purchasing power over the period of time. With FED funds rates getting higher, there might be a huge decrease in the rate at which money flows in the economy and as a result it will obviously prevent individuals or businesses to spend the money on assets such as stock markets. But OTOH, Bitcoin or crypto market in general is depended directly on the amount of technological innovations happening behind the scenes and is not related to the stock market. The recent rise in the prices of Bitcoin or crypto market in general can be tied to the reduction in block rewards or an increase of traders interest towards Defi markets and doesn't relate to stock prices.

Moreover, it is generally advisable to keep converting fiat into bitcoin and spend them for cheaper goods whenever necessary. As the supply is limited and the number of coins in circulation reducing on a rapid rate, Bitcoin will rise higher regardless of interest rates until volatility reduces.

[mindrust]

The Federal Reserve has come up with plans to raise interest rates again after doing so three times this year.
The Nation's Central Bank is expected to lift the benchmark Fed funds rate by 0.75 according to CME Fed watch
 
The Fed have been raising these rates aggressively in a bid to beat inflation, with some expecting the economy to enter a recession. Despite the previous rate hikes, economists predict that this may not be the last rate hike for this year because inflation has hit a 9.1% since June and assets like the cryptocurrency have not been left behind.

 Cryptocurrency have been dubbed the "cure-it all for what ails you" as it has helped to curb inflation, low interest rates, lack of purchasing power and what not. This was all when it was in it's high tho.
 With the way rates are going up, is it advisable to buy and hodl or to apply DCA to buy at intervals as price keeps fluctuating? Fed rates hike link

Not only bitcoin, the whole financial markets is at risk. The fed will eventually have to stop raising them rates but they need the inflation to stop before that happens. If the inflation keeps going up and it probably will, then the feed will have to keep raising them rates till the inflation stops. That would mean a lot more pain would happen in the both stocks and crypto markets.

Btc would probably go even lower if we see another interest rate hike.

[Tytanowy Janusz]

Not only bitcoin, the whole financial markets is at risk. The fed will eventually have to stop raising them rates but they need the inflation to stop before that happens. If the inflation keeps going up and it probably will, then the feed will have to keep raising them rates till the inflation stops. That would mean a lot more pain would happen in the both stocks and crypto markets.

Btc would probably go even lower if we see another interest rate hike.

BTC stop pumping 2 months before stocks. Stocks had ATH 2 months before first interest rate increase. Market always estimates next 2-6 months. not presence. Presence was calculated in few months ago. So if we are about to see inflation ATH (and the end of interest rates raising) in about 4 months ... its possible that bitcoin already bottomed in. People will continue to distrust pump because of FED raising rates until BTC pump to 50k and FED start to print back again because of short term inflation drop. They will jump in right before market starting to evaluate next 6 months in which inflation will come back and crash markets once again because high inflation will be with us for next decade but not like people think. It will not be a straight line. We will see couple waves of inflation, disinflation, maybe even short periods of deflation. Just like in 1980. Assets will go crazy.


 
The chart shows the SP500 and US inflation. Sorry for the % scale, but this was the only way I could show both charts on one picture. Tiker for US inflation on tradingview is USIRYY, if someone can show it better.

3 inflation waves, the first to 6%, the second to 12%, the third to 15%. The low of the 1974 stock market matched the peak in inflation, the same in 1970. If bitcoin is 2 months before stocks ...

Nowadays, many economists also argue that the peak of the current phase is near and warn against bullwhip effect, which may even lead to temporary deflation. Than printing will start, the stocks/crypto will return close to ath, than inflation will return, panic in the markets will return, and so on.

The bullwhip effect theory, which will force fed to print again, already has its confirmation in this chart (stocks vs sales):



And FED is printing for last 100 years. Speed up in 1971, go crazy after 2008, go insane after 2019. Its not like they are going to stop. They need it to survive. They will go back printing and destroying fiats as soon as economy will allow that.

And present 1.75% interest rate or even 2.75% after a while is still far below 9.1% inflation. Its still not the place where you want to have your money in. So its not sucking liquidity from markets as harsh as many may think.

[trendcoin]

I don't know why, but I think the Bitcoin price is at an extremely undervalued level. In my opinion, the number of people waiting to buy Bitcoin after the chaos that will occur in the market with the FED's interest rate hike may be too high.

Regardless, I think we are experiencing a temporary depression for Bitcoin. A store of value that has limited supply, that offers the possibility of money transfer without the need for third parties, and that has been operating successfully for 13 years, should have been in a better position in the current global crisis. I realize that I am disappointed when I evaluate our experiences regardless of technical and fundamental parameters, but I continue to trust Bitcoin and its promises to humanity.

[adaseb]

The fed rate hikes are already priced in. If there is a 75 bps hike next week, nothing will happen in the markets it’s already priced in. If it’s higher or lower than 75 bps then that’s a different story.

If you look at bond yeilds there are hints that the fed will be done hiking by end of 2022 and maybe even cut rates next year. Currently oil is down and most likely next CPI won’t be as high as it was for the last few months and it’ll calm the markets.

[Tony116]

The market always reacts to the news that the Fed raises interest rates, the last 2 rate hikes of the Fed also made the market wobble and I predict that the next time will continue to witness a new decline with another rate hike. Fed's third rate.
US inflation increased to 9.1%, higher than previous predictions, so the FED will not hesitate to raise interest rates, even willing to offer a higher interest rate of 75bps.

The worst possibility is that interest rates will be raised to 100bps instead of 75bps as expected, so we should have upcoming plans. I have prepared some USDT for this rate hike, I will keep collecting if bitcoin drops to 17k$.

[kaseygriffin]

I'm not sure if we all have the same opinion on BTC, but it seems to me that the Fed is having a big impact on the overall economy of the world. But we also need to look at BTC, see what tool it is for each of us, if we are still tied to the outside market economic knowledge and try to intertwine with BTC to maintain our financial resources. It is complicated. production as well as profit. I believe that in the long run, the records set by Bitcoin will make a difference in the financial markets.

[Poker Player]

With the way rates are going up, is it advisable to buy and hodl or to apply DCA to buy at intervals as price keeps fluctuating? Fed rates hike link

You have to choose depending on your situation. If you don't have a lump sum to invest now, you have no choice but to do DCA. However, if you do have that lump sum, you have a choice. If you believe in Bitcoin because of its characteristics, and you believe it will continue to appreciate in value over the long term, it's better to put it all in. In one cycle it will be worth more, and in two cycles it will be worth much more. Buying around $20 will seem like a bargain, so the sooner you invest the better.

[Gyfts]

It's hard to speculate but I can anticipate the bottom of the pool for Bitcoin being a whole lot deeper than what it is now if the feds continue to hike interest rates (which they will, inflation isn't going to come down to reasonable rates at the current pace). The US's economy hasn't reached recession yet. They could be in a recession now, we just don't know until the next GDP numbers get released. Negative GDP growth will shock the market, Bitcoin goes tumbling.

[be.open]

It's hard to speculate but I can anticipate the bottom of the pool for Bitcoin being a whole lot deeper than what it is now if the feds continue to hike interest rates (which they will, inflation isn't going to come down to reasonable rates at the current pace). The US's economy hasn't reached recession yet. They could be in a recession now, we just don't know until the next GDP numbers get released. Negative GDP growth will shock the market, Bitcoin goes tumbling.

And I think that the price bottom for bitcoin has already been passed, and here's why. The driver for inflation is the rise in energy prices, including the rise in the price of electricity - and this directly affects the cost of mining. Now the average price of mining one bitcoin in the US is about 21 thousand dollars, that is, miners in the US work at the socket level. Bitcoin mining in Europe has long been uneconomical. If you look around the world as a whole (and this is logical because bitcoin is a global network), it turns out that there are very few places where bitcoin mining still brings super profits due to very cheap electricity against the backdrop of a government that is relatively loyal to cryptocurrencies. On average, the situation is about the same as in the US, maybe a little better. With a global recession approaching, it is difficult to assume that miners will be able to sustain losses for long enough, they need at least a minimal operating profit to cover current expenses.

As for raising the Fed's discount rate, in order to cope with inflation, it is necessary to raise the rate not by 0.75%, but by at least 7.5%, which of course the Fed will not do, because it will cause an immediate collapse of the economy. Therefore, now the Fed is more likely not fighting inflation, but simply trying to be a little ahead of the ECB (hoping that this will be enough if the EU gets even worse and then the US dollar looks good against the background of the euro).

[Fortify]

The Federal Reserve has come up with plans to raise interest rates again after doing so three times this year.
The Nation's Central Bank is expected to lift the benchmark Fed funds rate by 0.75 according to CME Fed watch
 
The Fed have been raising these rates aggressively in a bid to beat inflation, with some expecting the economy to enter a recession. Despite the previous rate hikes, economists predict that this may not be the last rate hike for this year because inflation has hit a 9.1% since June and assets like the cryptocurrency have not been left behind.

 Cryptocurrency have been dubbed the "cure-it all for what ails you" as it has helped to curb inflation, low interest rates, lack of purchasing power and what not. This was all when it was in it's high tho.
 With the way rates are going up, is it advisable to buy and hodl or to apply DCA to buy at intervals as price keeps fluctuating? Fed rates hike link

That is a colossal rate rise and the opposite of the slow decline to almost zero that we saw before Covid. It's a very confusing situation but in reality the governments around the world were very weak and allowed the rates to stay far too low for far too long - pretending that it was stimulus. When rates were low people and companies could borrow vast sums while having to pay back relatively little in borrowing rates. Central bankers stuck with the easy option of keeping them down until it became impossible not to raise them and the unpopular association that comes with that. Bitcoin has done none of the things you listed, it is simply a mechanism for storing or exchanging a perceived value and it has actually lost a lot of trust from the wider public in the last few months of price drops, it'll take a while to recover back.

[be.open]

The Federal Reserve has come up with plans to raise interest rates again after doing so three times this year.
The Nation's Central Bank is expected to lift the benchmark Fed funds rate by 0.75 according to CME Fed watch
 
The Fed have been raising these rates aggressively in a bid to beat inflation, with some expecting the economy to enter a recession. Despite the previous rate hikes, economists predict that this may not be the last rate hike for this year because inflation has hit a 9.1% since June and assets like the cryptocurrency have not been left behind.

 Cryptocurrency have been dubbed the "cure-it all for what ails you" as it has helped to curb inflation, low interest rates, lack of purchasing power and what not. This was all when it was in it's high tho.
 With the way rates are going up, is it advisable to buy and hodl or to apply DCA to buy at intervals as price keeps fluctuating? Fed rates hike link

That is a colossal rate rise and the opposite of the slow decline to almost zero that we saw before Covid. It's a very confusing situation but in reality the governments around the world were very weak and allowed the rates to stay far too low for far too long - pretending that it was stimulus. When rates were low people and companies could borrow vast sums while having to pay back relatively little in borrowing rates. Central bankers stuck with the easy option of keeping them down until it became impossible not to raise them and the unpopular association that comes with that. Bitcoin has done none of the things you listed, it is simply a mechanism for storing or exchanging a perceived value and it has actually lost a lot of trust from the wider public in the last few months of price drops, it'll take a while to recover back.

What colossal rise rate are you talking about? You have a very short event horizon, the near-zero discount rate is a phenomenon of recent history and has only been observed since 2008. Look at events a little more broadly and you will see a discount rate of 5%, 10% and even 19% in 1981 - that's the order of numbers needed to really curb the inflation surge, and not pretend to be a frenzy of activity, which is now being done by the Fed.

[Leviathan.007]

From what we saw during all these years, we saw some bad effects from the fed on bitcoin and other assets and it was never about bitcoin but it's about all assets people invest in them, event of the fed can have an effect and but the effect is just temporary and it's not permanent because even after that bitcoin can have a chance to rise up once again, but still the cannot ignore that fed is having a big impact on the economy of all world, not just bitcoin.

[Reid]

With the way rates are going up, is it advisable to buy and hodl or to apply DCA to buy at intervals as price keeps fluctuating? Fed rates hike link

Buy and hodl whenever you can. That's my opinion. Doesn't really matter when the price will be if you are selling long-term.
But, if you are trying to make profits in short term then it is not advisable to do that. DCA might be your best buddy for that strategy.

One question that might answer your query. Do you think we are having a bad economy now? Base on your analysis or what's going on in your community and your daily consumption.
Yet, Bitcoin is not falling sharp. It actually resisted at the vicinity of $20k. That must/should mean something.

[The Sceptical Chymist]

With the way rates are going up, is it advisable to buy and hodl or to apply DCA to buy at intervals as price keeps fluctuating?

I'd say if you can afford to, DCA investing is probably your best bet--and as far as I know, that's true in the stock market as well.  Trying to time the market is blind luck, no matter what the technical analysis people tell you, because no one truly knows where tops or bottoms are.

Now the interest rate hike thing, that's already put a ding in bitcoin's price growth.  I strongly suspect the reason bitcoin fell from its 2021 levels is because the Fed increased rates and it became more expensive to borrow money.  Even if people weren't borrowing it to buy bitcoin with, they might have been borrowing in other areas of their life and using cash on hand to buy crypto with.  We've all heard stories of folks maxing out their credit cards to buy bitcoin and whatnot, and when interest rates go up, that behavior becomes less common.

If interest rates continue to go up (which is probably going to be the case), I'm not so much worried about bitcoin as the stock market.  Stocks will likely take a worse hit since the crypto market has already taken a beating this year, and stocks are what make up most of average people's retirement funds.  That could be a nightmare for the older generation.

[be.open]

If interest rates continue to go up (which is probably going to be the case), I'm not so much worried about bitcoin as the stock market.  Stocks will likely take a worse hit since the crypto market has already taken a beating this year, and stocks are what make up most of average people's retirement funds.  That could be a nightmare for the older generation.

Yep, that's right. The Fed is now in the role of Buridan's donkey, who does not know what to save - the dollar from inflation or the stock market from a collapse. I wouldn’t worry too much about bitcoin in this situation, because bitcoin is freedom, and there will always be enough paying demand for freedom in the world.