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Recent comments from U.S. Federal Reserve officials suggest a potential shift in their approach to interest rate hikes. In early 2022, the Federal Reserve had taken measures to control inflation, increasing interest rates by 5.3%. This action affected several risk assets, including the well-known cryptocurrency, bitcoin.
However, a recent change in tone from Federal Reserve leaders indicates a potential pause in these hikes. Atlanta Federal Bank President Raphael Bostic and Minneapolis Fed President Neel Kashkari have recently shared their view that there might not be a pressing need for future rate increases.
Similarly, Dallas Fed President Lorie Logan and Federal Reserve Governor Christopher Waller believe that the increase in Treasury yields might eliminate the necessity for more urgent rate increases, a sentiment echoed by Reuters.
Such statements have led to speculation that the Federal Reserve's aggressive rate-increasing phase may have concluded with the July increment of 0.25%. The general consensus now is that the central authority will observe the broader economic landscape before making further decisions.
A retrospective glance at the Federal Reserve's rate cycles brings to mind the scenario in December 2018, when the rates capped at 2.5%. This was followed by a seven-month period where the central bank didn't make any significant moves. It's worth noting that during this same interval, Bitcoin's value increased significantly, reaching $13,880 by June 2019.
Adding to the intrigue, this potential slowdown in the Federal Reserve's rate hikes aligns with an upcoming event in the Bitcoin mining world known as the "halving", which also occurred four years prior.
Markus Thielen, a prominent research and strategy analyst, had an observation that highlights the resemblance between the current macroeconomic landscape and the situation in 2019. Then, the Federal Reserve's decision to halt rate hikes was followed by a surge in Bitcoin prices.
As of now, Bitcoin's market price stands at $26,800, showing a commendable 62% increase since the start of the year.
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