Bitcoin was trading little changed after the Bank of England’s surprise decision to raise interest rates by 15 basis points to 0.25%.
- The largest cryptocurrency by market value is changing hands near $49,200 at press time, a 0.6% gain on the day.
- The BOE’s Monetary Policy Committee voted 8-1 to increase the bank rate to 0.25% and by 9-0 to maintain the amount of quantitative easing at £895 billion.
- The central bank was expected to keep the rate unchanged at a record low of 0.10%.
- The surprise increase challenges the narrative that central banks prefer to raise interest rates only after the end of quantitative easing or asset-purchase programs.
- Still, bitcoin is staying resilient, perhaps tracking signs of risk reset in traditional markets.
- The Australian dollar/yen currency pair is trading 0.6% higher on the day, extending Wednesday’s 1.18% gain and hinting at continued adoption of riskier assets following the U.S. Federal Reserve’s hawkish policy statement.
- Futures tied to the S&P 500 added 0.6% alongside gains in other growth-sensitive assets like industrial metals.
- On Wednesday, the Fed signaled three rate hikes in 2022, compared with market expectations for two, and doubled the pace of tapering, a reduction in bond buying, to $30 billion a month.
- The immediate focus now is on the European Central Bank (ECB) rate decision due at about 12:45 UTC.
- The ECB is expected to do the balancing act by announcing an end of the crisis phase while keeping the doors open for adjustments in both downside and upside scenarios.
- As such, traditional markets are likely to extend their risk-on stance, which may end up putting a bid under bitcoin – all the more so as there are signs of large traders accumulating the cryptocurrency on the dip.
- “Despite bitcoin’s recent 39% correction, the number of addresses with a non-zero balance continues to break all-time highs,” said Marcus Sotiriou, an analyst at the U.K. based digital asset broker GlobalBlock. “Also, since the $69,000 all-time-high, the Canadian Bitcoin Purpose ETF has added 6,341 BTC in assets under management, representing a 26.2% increase in coin holdings.”
- “This suggests institutional interest is prevalent at these prices and that whales are buying up Bitcoin supply during this correction,” Sotiriou added.
