Bitcoin Steady as BOE Hikes Rates by 50 Basis Points, 'Reverse Currency Wars' Gain Steam

The race among central banks to lift rates and support their currencies to keep inflation in check suggests the path of least resistance for risky assets is to the downside.

AccessTimeIconSep 22, 2022 at 11:30 a.m. UTC
Updated May 11, 2023 at 4:39 p.m. UTC

Bitcoin (BTC) held steady on Thursday after the Bank of England raised its benchmark interest rates by 50 basis points (bps) to 2.25% in a continued fight against inflation.

The BOE's second straight 50 bps move came a day after the Federal Reserve delivered its third consecutive 75 bps rate hike and signaled a higher terminal rate or peak rate of 4.6%.

The BOE said the inflation peak is likely to be lower than projected in August, at just under 11% and maintained that its policy isn't on a preset path.

The Swiss National Bank also lifted its borrowing cost by 75 basis points early during the day, exiting the negative interest rate policy. Meanwhile, Japan intervened in the foreign-exchange markets to stall the yen's slide.

The coordinated tightening, which began early this year, represents reverse currency wars – a race among central bankers to raise rates and support their fiat currencies to keep inflation in check.

The reverse currency wars indicate the path of least resistance for risky assets, including cryptocurrencies, is on the downside. Some analysts, however, believe the crypto market has already taken a beating and there is little downside left.

"Even if central banks tighten monetary policy further, the situation will not worsen more, for the current performance of crypto assets is terrible enough," Griffin Ardern, volatility trader from crypto asset-management firm Blofin, told CoinDesk.

Bitcoin was changing hands at $19,080 at press time, up 3% for the day, according to CoinDesk data.


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Omkar Godbole

Omkar Godbole is a Co-Managing Editor on CoinDesk's Markets team.