Title: Bitcoin rallies after Fed interest rate hike, but bears can still win Friday’s $1.76B options

Jul 29, 2022 02:00AM ET

By: AnalysisWatch

The Bitcoin price (BTC) has been in a downward channel since July 20 and is currently heading for the USD 20,000 level of support.

Adding to this bearish price trend, BTC has fallen 50% year-to-date, while listed U.S. tech stocks, as measured by the Nasdaq-100 index, have posted a 24% loss.

Risk assets have reacted negatively as the Federal Reserve tightens its economic policy by raising interest rates and reducing purchases of debt. Fed Chairman Jerome Powell will conclude a two-day meeting on July 27, and market analysts expect a nominal 0.75% rate hike.

Tensions in Europe are escalating as Russian state-controlled gas company Gazprom will cut off supplies to the Nord Stream 1 pipeline starting July 27.

According to CNBC, the company blames a maintenance problem on a turbine, but European officials disagree.

Tech stocks' July 27 performance was boosted by the U.S. Senate's passage of the Chips and Science bill, which provides $52 billion in subsidies backed by debt and taxes for U.S.

semiconductor manufacturing. Another $24 billion in loans is expected to be made available to the sector to spur research and compete with China.

For these reasons, traders have mixed feelings about the upcoming Fed announcement and the impact of the global crisis on cryptocurrency markets.

As long as Bitcoin's correlation to traditional markets remains high, especially in tech stocks, investors will seek protection by moving away from risky asset classes like cryptocurrencies.