The United States Federal Reserve is expected to raise interest rates once more in 2023, which could impact Bitcoin. According to the Federal Reserve's recent economic projections, most officials anticipate one more interest rate hike this year, with a projected federal funds rate of 5.6% by the end of the year. This suggests a potential quarter-point increase in interest rates, likely in November or December.
Looking ahead to 2024, some members of the Federal Reserve foresee two quarter-point rate cuts, indicating a reduced expectation of rate cuts compared to previous forecasts. This change reflects growing confidence in the economy's ability to handle higher interest rates without major disruptions.
Bitcoin, often considered a hedge against traditional market fluctuations, has historically shown an inverse relationship with central bank interest rates. When interest rates are low, investors often turn to Bitcoin for higher returns. However, as the Federal Reserve signals a potential interest rate hike, this dynamic may shift, making traditional interest-bearing assets more appealing.
Nevertheless, Bitcoin's role as a hedge and safe haven asset during times of economic uncertainty is expected to persist. It may continue to attract investors seeking to protect their wealth from inflation or financial instability, potentially fueling a new bull run in Bitcoin's price.