Bitcoin Holds $40,000 Support as Fed Confirms Rate Hike in 4 Years

Bitcoin (BTC) held at $40,000 on March 17 following an expected Fed rate hike.

Fed mentions Ukraine war in inflation commentary

BTC/USD climbed to a local high of $41,500 after the Federal Reserve announced it would raise interest rates by 25 basis points to 0.5%, the first hike since 2018, according to Cointelegraph Markets Pro and TradingView.

The Federal Open Market Committee (FOMC) voted almost unanimously in favor of a rate hike, accompanied by a statement warning that "upward inflationary pressures" will persist, especially because of the war in Ukraine.

"Russia's invasion of Ukraine is causing enormous human and economic hardship," it read.

"The impact on the U.S. economy is highly uncertain, but in the near term, the invasion and related events could put additional upward pressure on inflation and weigh on economic activity."

Looking ahead, the FOMC will continue to raise interest rates and the Fed will start reducing its asset holdings to reduce its record high balance sheet.

"The committee's assessment will consider a wide range of information, including readings on public health, labor market conditions, inflation pressures and inflation expectations, and financial and international developments," the statement added, referring to possible future policy changes.

After an initial bullish reaction, Bitcoin consolidated higher overnight and is still hovering around $41,000 at the time of writing.

For Cointelegraph contributor Michaël van de Poppe, it is crucial that the sub-$40,000 area now flips as support.

On the same day, he told followers on Twitter: "The market responded well, and the price broke through $39,600."

"The next question is whether we can sweep the highs of $42,000. That would open the door to the $46,000 mark. Holding is critical."

Those levels are well established as ladders that straddle Bitcoin’s 2022 trading range between $33,000 and $46,000, with one analyst this week arguing that only moves outside the top or bottom boundaries would be significant.

Asian markets keep getting Chinese promises

Optimism also remained in traditional markets, with China promising changes to favorable policies, fueling a comeback in Asian stocks.

Commentator Holger Zschaepitz concluded: "Before, China didn't care if Western investors couldn't invest there. But it did need money, and it didn't need to collapse. So, on Wednesday, word came out that China would be friendly."

Gold also looked promising, reversing some of its earlier retreat from highs above $2,000 an ounce.