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Turn in UF Fed interest rate cycle could drive Bitcoin rally forward

Investors with high risk appetite may take 2-5% exposure in their portfolios to this volatile, unregulated asset

Sanjay Kumar Singh

Premium

Photo: Bloomberg

4 min read Last Updated : May 03 2023 | 5:43 PM IST

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Bitcoin, the premier cryptocurrency, is once again attracting investor interest. After a dramatic plunge in value last year — from $66,935 on November 10, 2021 to $16,652 on November 21, 2022 — this digital asset is now witnessing a resurgence, with its price rallying to around $ 29,000 currently.

Expectation of change in Fed policy driving rally

The US Federal Reserve (Fed) is close to the end of its rate hike cycle. Several regional banks in the US have failed, commercial real estate is struggling, and homebuyers are having a hard time paying their mortgages. “Due to all these factors, market participants expect the Fed to pause and then start cutting interest rates, perhaps even do quantitative easing. Such a scenario will be positive for Bitcoin,” says Arjun Vijay, chief operating officer, Giottus Crypto Platform.