How do central bank decisions affect crypto markets?

Central bank decisions significantly impact crypto markets because they influence interest rates, inflation expectations, and overall economic sentiment. When central banks raise interest rates (like the Federal Reserve did in 2022-2023), investors often move money from riskier assets like cryptocurrencies to safer options like bonds. Conversely, low interest rates and money printing typically boost crypto demand as investors seek returns elsewhere. Additionally, central bank policies affecting currency strength influence international crypto adoption and cross-border trading. For example, when the Fed signaled rate hikes in 2022, Bitcoin fell from $69,000 to $16,500. Crypto traders monitor central bank announcements closely because these decisions create predictable market trends that affect both Bitcoin and altcoins.