OKX Research: What's the Impact of Interest Rate Hikes on the Crypto Market?

Senior Analyst at OKX Research, Zhao Wei

With global hawkish central banks on the verge of raising interest rates, will Bitcoin face a crippling blow or defy the trend and rally? This is the question top of mind for investors worldwide. Amid this uncertainty, the first week of February 2022 was anything but平静.

On February 4, ECB President Christine Lagarde不再排除今年加息的可能性, moving closer to the policy-tightening stance of global central banks. Officials privately预期最早可能下月就会调整政策指引.

Just minutes before the ECB's policy decision, the Bank of England raised its benchmark rate by 25 basis points to 0.5%—less than two months since its previous 15-basis-point increase. The combined economic output of the UK and the Eurozone is globally significant, and their policy trajectory could profoundly impact other nations.

1. No Turning Back? Global Inflation May Be Reaching a Tipping Point

Inflation across major economies has indeed accelerated to a point that demands immediate action: the Eurozone's January Consumer Price Index (CPI) rose 5.1%, exceeding economist expectations and posting the largest increase in at least two decades—more than double the ECB's 2% target. The UK saw CPI hit a 10-year high in November and reach a historic 5.4% in December, marking the fastest pace in 30 years. The US, meanwhile,刷新了39年的通胀纪录 with a 7% rate.

Two-year bond yields have surged this year as central banks adopt a hawkish stance, Source: Bloomberg

As early as December 15, 2021, the Federal Reserve announced it would reduce its monthly purchases of US Treasuries and mortgage-backed securities (MBS) by $30 billion—double the originally planned $15 billion reduction—putting the asset purchase program on track to end early next year rather than mid-year, aiming to curb inflation. As a result, most US financial elites expect the Fed to raise rates three times in 2022.

2. Rate Hikes May Curb Inflation, But Also Bring Unbearable Pain

The strengthening expectation of global rate hikes has sparked market panic, with US stocks suffering sharp declines. Data shows the S&P 500 fell 11% over 14 days, from January 13 to January 27. Goldman Sachs went a step further, issuing its first direct warning to the Fed: if tightening policies cause a "hard landing," the US could face a recession.

S&P 500 plunges 11% in just 14 days

Fearful of the impact from rate hikes, the Bank of Canada—which had been trying to curb soaring house prices driven by inflation—surprised markets by announcing a temporary hold on rate increases. Notably, Canadian federal bank regulators had previously warned that rate hikes could trigger a housing price crash exceeding 20%.

The Bank of Canada's explanation: "The new wave of COVID-19 has introduced uncertainty to the economy." But从中可以看出, policymakers feel caught between a rock and a hard place.

In contrast, Blackrock, the world's largest asset manager, took a more激进 stance, directly断言全球加息雷声大雨点小: "We believe that while central banks may sound hawkish, they will ultimately acknowledge that fighting inflation through significant rate hikes would exact too high a cost on economic growth. That's why we believe the ultimate policy response will be moderate."

3. Crypto Stands Out Amid the Storm; Bitcoin's Long-Term Bull Run Supported by Rate Hike Constraints

Looking at the crypto asset market, it experienced a dip followed by a rally around this Chinese New Year. Bitcoin has risen for five consecutive days, pushing its price to near $45,000, while Ethereum has reclaimed $3,200.

OKX Market Data: Bitcoin approaches $45,000 after falling below $33,000

Of course, the crypto market's standout performance amidst frequent traditional market turbulence has drawn regulatory attention. On February 8, the US SEC solicited public feedback on whether Bitcoin ETFs and Bitcoin itself are vulnerable to manipulation and fraud. Historically, the rapid growth of emerging industries tends to pose threats to incumbent interests, inevitably inviting pushback.

However, from a developmental perspective, the potential of crypto assets relative to traditional finance remains immeasurable. This may also explain why Bitcoin's value potential is far from reaching a tipping point—the long-term bull case remains undeniable. Admittedly, interest rate hikes by major central banks will also impact the crypto world. But given current economic conditions, significant and decisive policy reversals still face substantial resistance, which in turn provides some tailwind for crypto markets and supports long-term bullish expectations.

4. Seizing the Turning Point in the Ebb and Flow—A Rare Opportunity

The combination of long-term bullish expectations and bottoming prices has enhanced the industry's fundraising appeal. According to public reports, over $800 million in risk capital flooded into crypto assets over the past week alone. This signals that a new wave of bottom-fishing may be underway, drawing more capital and investors into the crypto world. Glassnode's weekly on-chain report shows that the number of non-zero wallets has reached a new all-time high, unaffected by the earlier price drop.

Glassnode Data: Bitcoin non-zero wallet count hits a new all-time high

The monetary easing cycle led by the Fed will eventually come to an end. When that time comes, capital flows and market trends could shift dramatically, bringing a new round of reshuffling. For investors, standing at a new starting point, selecting a new track, making careful choices, and acting decisively may offer a rare opportunity to overtake competitors.

Disclaimer

This article may contain product content not applicable to your region. This article is intended to provide general information only and makes no representation as to any factual errors or omissions. The views expressed herein are those of the author alone and do not necessarily reflect the opinions of OKX. This article is not intended to provide any advice, including but not limited to: (i) investment advice or investment recommendations; (ii) offers or solicitations to buy, sell, or hold digital assets; or (iii) financial, accounting, legal, or tax advice. Holding digital assets (including stablecoins) involves a high degree of risk and can fluctuate dramatically, or even become worthless. You should carefully consider whether trading or holding digital assets is appropriate for you based on your financial situation. For questions specific to your circumstances, please consult your legal/tax/investment professional. Any information provided in this article (including market data and statistics, if applicable) is for general reference purposes only. Although all reasonable precautions have been taken in preparing this data and these charts, we make no representation and accept no liability for any factual errors or omissions expressed herein. © 2025 OKX. This article may be reproduced or distributed in its entirety, and brief excerpts of 100 words or less may be used, provided that such use is for non-commercial purposes. Any reproduction or distribution of the full article must prominently state: "This article is copyrighted © 2025 OKX, used with permission." Permitted excerpts must cite the article title and include attribution, e.g., "Article title, [author name if applicable], © 2025 OKX." Some content may have been generated or assisted by artificial intelligence (AI) tools. Derivative works and other uses of this article are not permitted.

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