Santiment – a crypto markets intelligence platform – has a bullish outlook on Bitcoin after the Federal Reserve increased its benchmark interest rate by another 25 basis points on Wednesday.
In a follow-up blog post, the firm claimed that the top crypto is showing “some promising rise potential” – particularly as its correlation to equities continues to weaken.
What’s Next for Bitcoin?
In its latest insight report, the company said that the market’s initial reaction to the rate decision was one of relief – glad that the expected hike was “over with,” until the next decision scheduled for June.
Some positive signs include Bitcoin surging a modest 2% since Wednesday’s FOMC announcement, and increased trading volume across top market cap assets. Those top assets also lack “any extreme shorts across the board” – not even on Binance Coin, which has been shorted throughout the past month after the exchange was sued by US regulators.
Furthermore, Wednesday registered the highest Bitcoin address trading activity in two weeks, with active addresses pushing higher immediately after the rate hike.
“This was the highest address activity day in two weeks, and the one from two weeks ago was mainly credited due to a major price drop that traders were reacting to,” explained Santiment. “This rally seemed to be much more related to the rate hike finally being official, and you can see how active addresses pushed even higher directly after the announcement.”
Bitcoin, Equities, and Gold
While the Federal Reserve’s target rate now floats at a relatively high 5% – 5.25%, this may not be such an issue as Bitcoin’s correlation to equities – which are highly responsive to central bank activity – continues to fade. As noted by Santiment, Bitcoin’s modest reaction on Wednesday stood in sharp contrast to its moves following similar rate hikes throughout 2022, which drove Bitcoin and equities alike to multi-year lows.
“It’s important to assess how speculation revolving around how today’s Fed decision would go may have overshadowed the actual impact of the Fed’s predictable decision,” added Santiment.
Ever since Silicon Valley Bank collapsed in May, Bitcoin’s correlation to equities has plummeted, while its correlation to gold has simultaneously surged. Both Bitcoin and gold have frequently been compared as non-sovereign, safe-haven assets that are immune to fiat currency debasement and shielded from the woes of the modern banking system.