Bitcoin (BTC) experienced a period of volatility on September 20th as the United States Federal Reserve announced its decision to maintain interest rates at twenty-year highs. This rate decision had a significant impact on the price of BTC, prompting reactions and analysis from experts in the field.
Data from Cointelegraph Markets Pro and TradingView closely observed the price action of BTC as it reacted to the rate decision and comments made by Federal Reserve Chair Jerome Powell. The Federal Open Market Committee (FOMC) chose to keep rates at their previous levels, which were set in July of that year. In a press release, the FOMC stated its objective to achieve maximum employment and inflation at a rate of 2 percent over the long term. Consequently, the decision was met with little surprise as it had been overwhelmingly anticipated by the market due to a 99% probability of a rate hike pause, according to CME Group’s FedWatch Tool.
However, despite the rate decision, the Federal Reserve’s language remained cautious regarding the future of inflation, leaving no assurance that conditions would become more relaxed. The FOMC pledged to monitor the implications of incoming information on the economic outlook and to adjust its monetary policy stance accordingly. This cautious tone raised questions about whether there would be any future rate hikes.
Reacting to the news, Michaël van de Poppe, founder and CEO of trading firm Eight, predicted that there would be no further rate hikes. He suggested that this would benefit Bitcoin, speculating that the cryptocurrency would start trending upwards from this point onward, although he acknowledged the possibility of a fakeout occurring immediately following the news.
The market paid close attention to Powell’s subsequent speech at the press conference. Powell hinted that another rate hike could potentially occur in 2023. He emphasized that there was still a long way to go in terms of achieving the Fed’s 2% inflation target. In terms of the median projection for interest rates, participants predicted that the federal funds rate would be 5.6% at the end of that year, 5.1% at the end of 2024, and 3.9% at the end of 2025.
Despite this indication of future rate hikes, BTC/USD managed to hold above $27,000, with no significant breakout from the recent intraday trading range. This stability in BTC’s price reflects the market’s cautious stance and its efforts to assess the impact of the Fed’s rate decision and Powell’s comments.
It is important to note that this article does not provide investment advice or recommendations. Investing and trading always involve risks, and individuals should conduct their own research before making any decisions.
In conclusion, the United States Federal Reserve’s decision to maintain interest rates at twenty-year highs caused a moment of volatility for Bitcoin. While the market had anticipated this rate pause, the Fed’s cautious language on inflation raised questions about future rate hikes. Some experts predicted a positive impact on Bitcoin’s price, while others remained cautious. Going forward, the market will closely monitor any new developments to determine the long-term implications for Bitcoin and the broader cryptocurrency market.