Following the initial March 2022 hike, bitcoin rallied roughly 18% over the following 12 days before subsequently falling around 50%. That raises the possibility that another relief rally could give way to a prolonged bear market. However, one comparable cycle offers limited evidence, and bitcoin’s decline in 2022 coincided with losses across equities, bonds and metals, alongside turmoil within the crypto industry.

The reasons the Fed hiked rates on Wednesday was due to inflation, annual headline inflation has remained above 2% for over five years, although core inflation, which excludes food and energy, has eased to 2.4%, its lowest level in five years. So progress is being made.

However, that progress has now been faced with an energy shock. Geopolitical tensions in the Middle East have pushed both WTI and Brent crude well above $100 a barrel, threatening to reignite inflation and squeeze growth. Global bond yields have also climbed, with the U.S. 10-year Treasury yield reaching 5%, adding further pressure to financial conditions and risk assets.

Bitcoin’s bear market is approaching the one-year mark. Could a new rate-hiking cycle prolong the downturn?