Bitcoin drops below $42k ahead of Fed rate hike

Bitcoin continued to dive and lost the $42,000 mark as the Federal Reserve weighs an interest rate increase in March. Tensions between Russia and Ukraine have also swayed the digital asset, with a price of $35,000 potentially around the corner on major exchange Binance.

Bitcoin dives

According to CoinTelegraph, the anxiety in the markets triggered by the Fed’s rate hike and a possible Russian invasion over Ukraine have sent bitcoin’s price down. At the start of Thursday trading, the digital currency dropped from the $42,000 price mark, deflating investors.

James Bullard, president of the St. Louis Fed, told CNN of the possibility of an interest rate hike next month currently on the Fed’s cards to curb inflation: “We are missing our inflation target on our preferred measure... and policy is still at rock bottom lows and we’ve still got asset purchases going on.”

“This is a moment where we need to shift to less accommodation,” Bullard conceded.

Any stock revival would bear the brunt of a fast-tracked anti-inflation measure by the Fed, and bitcoin would certainly be affected given its correlation with equities.

Odds

Material Indicators revealed that bitcoin demand on Binance had gone cold and below $40,000. Any sudden move could send the crypto asset on a dive to $35,000 ground.

The source added, “Doesn't mean that local support can't hold or that the fractal has been invalidated yet, but does increase downside risk of longing from this range.”

The Federal Open Market Committee (FOMC) held a meeting in late January and pointed to a hike in March, according to the minutes.

“The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run,” they read.

“In support of these goals, the Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent. With inflation well above 2 percent and a strong labor market, the Committee expects it will soon be appropriate to raise the target range for the federal funds rate.”