Odds of a rate hike jump to 7%…Bitcoin falls below $70,000

An unexpected hawkish signal from the U.S. Federal Reserve (Fed) jolted markets, sending the digital asset (cryptocurrency) market back into decline. The probability of a rate hike—previously seen as unlikely this year—also surged.

According to the interest-rate futures market on the 19th (local time), the likelihood of a 25bp increase in the policy rate at the April Federal Open Market Committee (FOMC) meeting was priced in at 7.2%, while the probability of a rate cut fell to virtually 0%.

Earlier, Fed Chair Jerome Powell said he would not rule out the possibility of raising the policy rate. Although the Fed held the policy rate steady at an annual 3.50~3.75% at the FOMC meeting on the 18th (local time), it left the door open to the possibility of further increases with regard to the future policy path.

Chair Powell said, "The possibility that the next move could be a rate hike is also being raised," adding, "We are not ruling out any options," sending a hawkish signal to markets.

As the possibility of a rate hike has come back into focus and expectations spread that the timing of rate cuts could be delayed, selling pressure intensified across risk assets.

Bitcoin (BTC) rose as high as $76,000 at one point, but turned lower after the FOMC and fell back below the $70,000 level. As of 10:50 a.m. that day, Bitcoin had pared some losses and was trading in the $70,500 range on Binance’s Tether (USDT) market.

An industry official said, "With Middle East geopolitical risks and concerns about monetary tightening coming into focus at the same time, volatility in the digital asset market is likely to increase for the time being," offering that assessment.