The gains accompanied a steep overnight spike in the number of Bitcoin whale addresses. On March 1, Bitcoin extended its gains, reaching just under $45,000 as interest rate speculators minimized their bets on aggressive rate hikes this year, and the number of whale addresses spiked amid the speculations that BTC is proving itself as a political haven asset.
Traders appear to have reduced half-point bets for March. The price of bitcoin surged by more than 4% to reach $45,000, a day after it recorded its largest one-day increase since February 2021 as many sanctions on Russia, including a ban from accessing the global banking network SWIFT, raised fears over their effect on global growth and inflation.
For example, swaps linked to the Federal Reserve’s mid-March meeting expected a 24.5 basis point (bps) tightening as of March 1, 2022. That showed a 0.5 bps rate increase that had a 100% approval from interest rate traders in the past month, is less likely to occur.
Repricing Of Fed Outlook To Affect Bitcoin
In the meantime, the traders also reduced their expectations of the number of rate hikes in 2022 to five from seven just some days ago, as highlighted by Bloomberg’s Lisa Abramowicz, who shared the chart below.
The repricing of the Fed outlook came in as investors’ demand for havens, including US Treasuries and gold, exploded in the past several days. Bitcoin had earlier lost over half of its value due to the fears that surrounded aggressive Fed rate hikes, also responded with a steep recovery due, partially, to the reports that Russians were purchasing the crypto to bypass the many sanctions.
Buy Bitcoin NowOne analyst at XTB Market, Walid Koudmani, told Bloomberg:
“Bitcoin saw a significant upward move today as it appears to have slightly regained its safe-haven status while the Russia-Ukraine conflict continues to intensify.”
Data acquired from crypto research company CoinMetrics also published a considerable spike in the total number of addresses holding over 1,000 BTC, normally considered ‘whales’ by the sector. Their number increased from 2,127 on February 27 to 2,266 on February 28.
Will It Reach 25bps
The president of the Federal Reserve Bank of Atlanta, Raphael Bostic, favored a 25 bps rate hike at the Federal Open Market Committee’s meeting that was held at the end of February. Nevertheless, he also stated that a higher than expected inflation reading may have him “look at a 50-basis-point move for March.”
On the other hand, Ecoinometrics analyst Nick insists that the Russia-Ukraine crisis has now compelled the Fed to walk on some shaky ground. With inflation expected to remain high due to considerably high oil prices, he stated, a highly aggressive rate hike in March might risk crashing the global stock market.
He wrote:
“Inflation is so high that we can probably afford a stock market dip all the way down to -20%. But below that, they’ll have to call back the tightening or risk a multiyear bear market […] Of course that’s not good for Bitcoin.”
