What’s ahead for the Bitcoin price in 2022 amid rising interest rates?

The Bitcoin (CRYPTO: BTC) price is up 5% over the past 24 hours.

The worlds first crypto is currently trading for US$41,012 (AU$56,764). That gives it a market cap of US$781 billion, according to data from CoinMarketCap.

The Bitcoin price is now up 2% over the past 7 days, though it remains down 14% year-to-date.

How will the Bitcoin price fare as interest rates rise？

Yesterday (overnight Aussie time) the US Federal Reserve raised its official interest rate by 0.25%. This was the first rate rise from the worlds most watched central bank since 2018.

So, does this mean that the Bitcoin price is likely to continue higher amid a series of expected interest rate increases？

Not so fast.

It‘s not only Bitcoin that’s gained following the US rate hike. Most growth shares leapt higher as well.

The tech-laden Nasdaq, for example closed up 3.8%. And here in Australia technology shares led the charge, with the S&P/ASX All Technology Index (ASX: XTX) up 3.5% in the final minutes of trading.

The risk-on sentiment was spurred not by the rate rise. But by US Fed Chair Jerome Powell‘s bullish outlook for the US economy, the world’s largest.

Joel Kruger, a strategist at crypto exchange LMAX Digital is decidedly bearish on the outlook for the Bitcoin price as rates rise.

“Rates going higher will strangle equity markets. So, if we see a mass exodus out of risk assets, itll weigh on everything… New lows in stocks could contribute to a decline in crypto assets,” he said.

Kruger forecast that if the Fed pursues a hawkish tightening cycle, the Bitcoin price could fall to US$20,000.

With interest rates moving higher in an effort to stem fast rising inflation, Ryan Nauman, market strategist at Zephyr, is doubting that the range bound Bitcoin price can live up to its billing as a potential inflation hedge.

“Investors are still trading it short-term in this range and it can‘t really bust out. It makes me more sceptical of its long-term viability as an inflation hedge and whether it’s a competitor to the US dollar as a reserve currency,” he said.

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