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Are Upcoming Interest Rate Decisions Causing Bitcoin To Fall?

24 March 2023 11:52, UTC

Since 2015, the US Federal Reserve (Fed) along with a number of other global central banking systems has been raising interest rates in a bid to battle inflation. While these hikes are aimed at centralized finance, the decisions have affected the crypto market in the past. In particular, the price of Bitcoin (BTC) tends to fall when interest rates are raised.

In March, a number of global banks are set to make decisions about interest rates. It is rumored that the Fed will continue to raise rates in the US and the ECB and BoC are predicted to follow suit. So, could this mean that the price of BTC will fall again? Here, we take a look at upcoming interest rate decisions and how they could affect the price of Bitcoin in 2023.

Upcoming Interest Rate Decisions March 2023

According to the economic calendar, there are several interest rate decisions that are set to take place in March 2023. We've outlined these below:

BoC Interest Rate Decision

The Bank of Canada (BoC) will announce its interest rate on March 8th. It has been predicted that the bank will hold its current interest rate of 4.50% for the remainder of the year. This comes after the bank has raised rates by a total of 425 basis points over the past year.

Fed Powell Testimony

Also on March 8th, the Fed is set to make decisions about interest rates in the US. In the US, interest rate decisions are made by a board of governors from the Fed and the FOMC (Financial Open Market Committee). Due to rising inflation, interest rates in the US are predicted to rise more than expected in 2023.

BoJ Interest Rate Decision

The Bank of Japan (BoJ) will announce its interest rate decision on March 10th. In contrast to other central banking systems, BoJ is set to keep low-interest rates despite some concern over rising rates of inflation.

ECB Interest Rate Decision

For European countries, the European Central Bank (ECB) will announce its interest rate decisions on March 16th. The banking system is predicted to raise current rates to maintain an inflation rate of around 2%.

How Could Upcoming Interest Rate Decisions Affect The Price of Bitcoin?

In the past, the price of Bitcoin (BTC) has taken a fall when central banking interest rates go up. When interest rates are high, traditional investments like bonds and savings accounts offer higher returns. This can make alternative investments like Bitcoin less attractive to investors looking for higher returns, as the opportunity cost of holding Bitcoin becomes higher.

Furthermore, high-interest rates can lead to slower economic growth, which can reduce investment in riskier assets like Bitcoin. In times of economic uncertainty, investors may be more risk-averse and may prefer to hold safer investments like cash or government bonds.

As a result, the price of Bitcoin is likely to be volatile over the next few weeks as a number of central banks announce new interest rates. If interest rates are raised, the price of BTC could fall and create an opportunity to buy the dip. However, the price can never be guaranteed and other market factors could help the asset to maintain value despite possible rate hikes.

Crypto investors should keep an eye on the market over the next few weeks as decisions are announced.