On March 22nd, the value of Bitcoin experienced a decrease of close to five percent, returning to the 26,000-dollar mark. The decline was attributed to the announcement made by the United States Federal Reserve regarding a quarter-percentage point hike in interest rates.

This event is the ninth consecutive increase in interest rates and the second quarter-point rise in a row. The announcement significantly impacted Bitcoin’s value, causing it to experience a noticeable dip.

Economist Robin Brooks, who is associated with the Institute of International Finance (IFF), expressed his views on the performance of Bitcoin via a tweet. According to his tweet, Bitcoin displayed “authentic diversification characteristics at present – albeit in the negative direction.”

Brooks implied that Bitcoin’s recent drop in value, which occurred after the announcement of increased rates by the U.S. Federal Reserve, indicates its capacity to serve as a simple diversification tool. In addition, the tweet suggested that Bitcoin is not necessarily correlated with traditional financial instruments and can serve as a hedge against market risks.

The economist associated with the Institute of International Finance (IFF) made a sarcastic remark regarding Bitcoin’s diversification attributes. He joked that holding Bitcoin was like having a situation where “heads you lose, tails you lose because the cryptocurrency’s fall in value when it was anticipated to rise.

However, this tweet created a backlash from cryptocurrency supporters, who took offense at his remark. They began to attack Brooks in the replies to his tweet, expressing their displeasure with his negative comments about Bitcoin. Despite the backlash, Brooks’ tweet highlighted the volatility of Bitcoin and the potential risks associated with investing in the cryptocurrency market.

As reported by U.Today, Robin Brooks criticized Bitcoin on March 14th, labeling it as “just another bubble asset.” In his comments, he stated that the cryptocurrency had zero yields, zero stores of the value function, and zero diversification benefit.

Brooks’ assessment of Bitcoin was negative, implying that it lacked fundamental qualities that make it a viable investment option. These criticisms suggest that he believed Bitcoin to be a risky investment with little potential to provide returns or serve as a hedge against market volatility. Moreover, his comments on Bitcoin and his recent tweet indicate his skepticism toward the cryptocurrency market as a whole.

The Federal Reserve Policy

The Federal Reserve’s most recent policy meeting was cautious regarding the latest crisis sparked by the closure and failure of several prominent financial institutions. However, the meeting highlighted the resilience of the American banking structure.

As a result, the choice to continue increasing interest rates was in line with the expectations of Wall Street. However, this decision dashed the hopes of crypto bulls anticipating a more dovish approach in light of the banking crisis.

Despite this setback, it is important to note that the cryptocurrency market remains highly volatile and subject to sudden changes. Frequent fluctuations in recent times have characterized the Bitcoin price. Most recently, it surged to a year-to-date increase, crossing the 28,000 dollars mark, spurred on by the financial turmoil.

However, Robin Brooks’ comments indicate that Bitcoin’s recent value increase may not indicate its real value or potential. Brooks implies that cryptocurrency remains an unreliable investment due to its volatility, which has again emerged following the Fed’s decision to hike interest rates. His comments suggest that cryptocurrency remains a risky asset class unsuitable for all investors.