If the Federal Reserve raises interest rates, the price of Bitcoin may be negatively affected. This assumption is based on the following two points: 1. A strong rise in the U.S. dollar will benefit from this interest rate increase, which may trigger Capital flows back into the U.S. market, and the U.S. dollar exchange rate rises. The strong rise in the U.S. dollar may have an adverse impact on the price of Bitcoin, because the price trends of the two have always been inversely related, with one escalating and the other ebbing. 2. Speculative investment will decrease. Interest rate increases may lead to a decrease in speculative investment. Changes have occurred in the world of high-risk investing as expectations of higher interest rates rise. At this stage, Bitcoin is still a speculative asset, so large-scale outflows of funds into more stable and lower-risk investment areas may have a negative impact on Bitcoin prices.
But Bitcoin investors don’t need to worry too much. While the expected rise in the U.S. dollar may have a negative impact on the price of Bitcoin, some fairly basic analysis suggests that the relationship between Bitcoin prices and Fed rate hikes is not that close, as the market always gets ahead of the news. Just like the previous global stock market crash, the price of Bitcoin fell instead of rising.
The factors that influence the price of Bitcoin are very complex, so it cannot simply be considered that raising interest rates is a negative, but must be analyzed in conjunction with the country's macroeconomic aspects.