Bitcoin Price Spikes After Federal Reserve Holds Interest Rates: What You Need to Know
Bitcoin (BTC) experienced a sudden surge in price following the recent Federal Open Markets Committee (FOMC) meeting, where the Federal Reserve announced that there would be no changes to interest rates. This decision dashed hopes for a more accommodative stance in the near future, leaving investors disappointed. Here’s what you need to know:
Bitcoin Jumps Following FOMC Announcement
- Just an hour before the FOMC announcement, Bitcoin was trading at $62,000.
- However, as soon as the updated benchmark rate was revealed, Bitcoin’s price shot up to $64,600.
The Federal Reserve’s Statement
In its official statement, the Federal Reserve acknowledged that the country’s economic activity continues to expand, unemployment remains low, and inflation remains elevated. The key points from their statement are as follows:
- The Committee does not anticipate reducing the target range until there is greater confidence that inflation is sustainably moving towards 2 percent.
Market Expectations for Interest Rates
The market’s expectations for interest rates were reflected in CME FedWatch, which predicts the likelihood of future rate changes. Here are some key insights:
- The market believes that interest rates will remain unchanged at the next FOMC meeting in May.
- However, there is a 60% probability of a 25 basis point reduction in June.
Bitcoin ETF Outflows Impacting Price
Last week, Bitcoin’s price dropped from $74,000 as Bitcoin ETF net flows significantly slowed down. In fact, it even turned negative over the past couple of days. This decline was influenced by various factors:
- The hotter-than-expected inflation reading in the U.S. on March 12, which reported a 3.2% increase for February.
Hot Take: Bitcoin Reacts to Federal Reserve’s Decision
The recent announcement from the Federal Reserve regarding interest rates had a direct impact on Bitcoin’s price. The decision to keep rates unchanged disappointed investors who were hoping for a more accommodative stance. As a result, Bitcoin experienced a sudden surge in price immediately after the FOMC meeting. However, it is important to note that the market’s expectations for future rate changes indicate a potential reduction in June. This suggests that Bitcoin’s price may continue to be influenced by monetary policy decisions and macroeconomic factors.
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