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Bitcoin price suffered a decline, reportedly, after the news of a rate hike by the European Central Bank. The ECB hiked the interest rate by 50 basis points, paving way for further interest rate changes through the Governing Council’s meetings.
In a landmark moment in Euro Area history, the interest rate climbed from zero to 0.50% for the first time in eleven years. Experts had anticipated an increase of 0.25% or 25 basis points, however, the bank cited concerns around rising inflation and consumer prices as the key reason for the hike.
The transition from zero interest rate to 0.50% was not well received by crypto investors. Bitcoin, Ethereum, and altcoins in the top 30 witnessed a steep decline, wiping out gains from the past two weeks.
The US CPI announcement recently got priced in, and cryptocurrencies were in the green since the beginning of the week. However, the ECB announcement has now turned the tables in favor of the bears. Bears have taken control of Bitcoin and BTC price dropped below the $23,000 level. Bitcoin failed to sustain above the 200-week moving average level, considered key to the asset’s uptrend. It is likely that the Bitcoin price witnesses further decline, hitting the sub-$20,000 level.
Several recent events like Tesla’s shedding of $966 million in Bitcoin and the reduction in whale activity on the BTC network have negatively influenced the asset’s price.
The ECB is expected to normalize interest rates in the future at the next Governing Council meeting. In the meanwhile, the Bitcoin price is expected to attempt recovery. The ECB’s statement reads: “The Governing Council judged that it is appropriate to take a larger first step on its policy rate normalization path than signaled at its previous meeting.”
Disclaimer: The views and opinions expressed in this article are solely the author’s and do not necessarily reflect the views of CQ. No information in this article should be interpreted as investment advice. CQ encourages all users to do their own research before investing in cryptocurrencies.