The Bitcoin (CRYPTO: BTC) price is soaring today.
The world's original crypto is up 10% since this time yesterday, currently trading for US$23,138 (AU$33,109).
Over the past 24 hours, the Bitcoin price hit lows of US$21,112 and peaked at US$23,358, according to data from CoinMarketCap.
Although even with the sizeable rally, BTC has a long way to go before recouping its all-time highs of US$68,790, set on 10 November last year.
Why is the Bitcoin price rocketing?
Crypto investors are bidding up the Bitcoin price alongside a host of other risk assets.
Ethereum (CRYPTO: ETH), the world's number two crypto by market cap, as one example, is up 14% over the past 24 hours.
In fact, only a single one of the top 100 cryptos by market cap has lost value since this time yesterday. Namely TerraClassic (CRYPTO: USD), which is down just under 2%.
As for another good gauge of investor risk appetite, the NASDAQ closed up a whopping 4.1% yesterday (overnight Aussie time).
"Bitcoin's correlation to the NASDAQ is rising again, so it's easy to see why we've had this rally," Josh Gilbert, market analyst at eToro told The Motley Fool.
All this comes on the heels of the 0.75% interest rate hike by the US Federal Reserve.
So, why are risk assets heading higher following the second consecutive outsized rate hike from the world's leading central bank?
It appears investors are taking heart from some potentially dovish signals issued by Fed chair Jerome Powell, who said it may "likely become appropriate to slow the pace of increases" later in 2022.
That, of course, will all depend on how quickly the central bank can get the inflation genie back in its bottle.
"This Bitcoin price rally comes as we could be nearing the end of red-hot inflation in the US, with the Fed acknowledging softer spending and production," Gilbert said.
"Inflation is the most important number in markets right now and is the biggest worry amongst investors. If investors believe that we have reached peak inflation, they may look to slowly start adding exposure back to risk assets, such as Bitcoin."
Risks remain
The Bitcoin price is historically volatile by nature, and risks remain of further downturns in the months ahead.
"We aren't entirely out of the woods.," Gilbert told us. "US Q2 GDP released this evening may show the US economy contracted for the second month in a row, which by definition is a technical recession."
Gilbert added:
Yes, we have rallied off the lows. But plenty of macro risks can still affect crypto in the short to medium term. Markets have had plenty of surprises this year, and I don't expect we've seen them all.
