Chapter 3 Federal Reserve makes a downshift
Bitcoin pulled back slightly as investors reacted to the latest Federal Reserve policy. As was widely expected, the Federal Reserve decided to hike interest rates by 0.50% in its final meeting of the year. It had hiked by 0.75% in the past four straight meetings as it battled soaring inflation.
In its statement, the Fed welcomed the recent trends in inflation but warned that the battle was still on. After peaking at 9.1% earlier this year, consumer prices dropped to 7.1% in November, signaling that the Fed’s policies are working. Still, inflation remains at an uncomfortable level, which means that the Fed has more work to do.
Bitcoin also rose as investors reacted to the recent happenings in FTX. Sam Bankman-Fried was arrested on Monday and presented to court on Tuesday. He will remain in prison until February when the court will start listening to his extradition issues.
Analysts expect that FTX’s collapse will lead to significant regulations in the United States. Already, officials are investigating Binance, the biggest crypto exchange in the world. The company is being investigated for committing several crimes, including mony laundering.
As a result, these red flags pushed crypto holders with Binance to sell billions of coins in the past few days. On Tuesday, they sold coins worth over $3 billion as contagion risks rose. According to DeFi Llama, some of the customers started returning, with inflows of about $1 billion.
