The first quarter of 2022 ended on a high note with bitcoin breaking through the roughly $38K - $42K trading range and closing the month at $45,596. Bitcoin was up 8.75% for March, closing the quarter nearly flat (-0.6%) after a tough start to the year for most asset classes, bitcoin included.
Rising interest rate fears and the expectation of tighter monetary conditions continue to be a focus for bitcoin investors. The Federal Reserve made good on its pledge to raise interest rates to fight inflation; on March 16th, the Federal Open Markets Committee (FOMC) raised the range for the Fed Funds rate by 0.25%. The market expects nine more hikes in 2022, and the Fed Funds futures market is pricing an implied rate of 2.87% in 12 months, well above today’s 0.25% - 0.50% range. Bitcoin investors are keeping a close eye on how the Fed 1) deviates from this expectation and 2) plans to manage its nearly $9T balance sheet, with an announcement related to the latter expected at the May 4th meeting.