Despite plummeting record-high interest rates in the United States, Europe, and the United Kingdom, Bitcoin remained reasonably stable in September, gaining 4.7%. At this rate, the coin had one of its best years since 2012 and 2016, when it gained 23.5% and 5.7%, respectively.
Despite Attractive Interest Rates, Bitcoin Grew In September
Trading at around the $27,300 zone when writing on October 3, Bitcoin is up roughly 10% from September lows, and traders are confident that the next leg of higher highs has just begun, considering the strong upswing in late September, which was confirmed in early October, translating to a strong start for Q4 2023.
According to Kaiko, Bitcoin is "firm" even though fund rates are relatively high, and conservative investors, especially institutions, are pulled in by governments offering a "risk-free" dividend, according to the analytics platform. In order to combat rising inflation, the US government boosted interest rates fast during 2022 and the first half of 2023.
Regional banks were stretched with each basis point increase, with some declaring bankruptcy in Q1 2023. Furthermore, capital that would otherwise flow to cryptocurrency is redirected to the bond and treasury markets due to the generally high but safe interest rates.
The Federal Reserve of the United States kept interest rates between 5% and 5.25% as of October 3. Inflation, on the other hand, climbed to 3.7% in August after declining steadily since peaking at 8.2% in September 2022--the most in nearly 30 years.
In an ideal world, the Federal Reserve would like to keep inflation around the 2% figure. As a result of rising inflation, the chances of Jerome Powell, the head of the Federal Reserve, raising interest rates at the next meeting remain strong, a move that may have a big influence on crypto liquidity and top coin prices, including Bitcoin.
When the Federal Reserve hiked interest rates in 2022, Bitcoin values fell from their highs in 2021, falling below $16,000 in November 2022. Dropping cryptocurrency prices harmed crypto platforms, as big exchanges such as FTX declared insolvency.
Disclaimer: This article is for informational purposes only and should not be considered as financial advice.