Bitcoin and the Federal Funds Target Rate
Bitcoin was born in the aftermath of the Great Financial Crisis, in 2009, when interest rates were brought down to 0%. After accelerating to nearly $20,000 at the end of 2017, the price fell to $3,000 as the Fed embarked on a cycle of raising interest rates. The Fed eventually reversed course and lowered rates after the stock market fell by -20%, credit markets showed signs of trouble, and the economy seemed to slow. The Fed Funds rate eventually hit 0% in Covid, while we were all stuck inside, extremely online, and with excess savings both from government stimulus and the fact that people couldn't go anywhere to spend any money. Or find anything to buy given supply constraints. It is not surprising Bitcoin began to crash again as the Fed began raising rates. Fed Chair Jay Powell may be the most important man in the world when it comes to where Bitcoin goes next.