BTC drops and then recovers following the Fed’s stay on hold

CoinDesk

The accompanying policy statement noted that the unemployment rate had stabilized at a “low level” and inflation remained “somewhat elevated.”
Under pressure for most of this week, the price of bitcoin (BTC) dipped to $101,800 shortly following the news.
U.S. stocks added to the day’s losses, with the Nasdaq down 1.1% and the S&P 500 lower by 0.9%.
Since the Fed’s first September rate cut, the fed funds rate has been slashed by 100 basis points.
At his post-meeting press conference, Powell said the change in the policy statement language with respect to inflation was not done to send any sort of message.

NEGATIVE

Naturally, the U.S. S. . For the first time since it started loosening policy last September, the Federal Reserve has maintained its benchmark fed funds range rate at 4 to 25 percent to 4 to 50 percent.

According to the accompanying policy statement, inflation was still “somewhat elevated” and the unemployment rate had settled at a “low level.”. The language was hawkish because it eliminated the mention of “progress” on inflation reaching its 2 percent target from the previous month.

Following the news, the price of bitcoin (BTC), which had been under pressure for the majority of this week, dropped to $101,800. The U. A. Stocks contributed to the day’s losses, with the SandP 500 down 0.9 percent and the Nasdaq down 11.1 percent. While there was minimal movement in the dollar and gold, the yield on the 10-year Treasury increased by 5 basis points to 4 percent.

The Fed has slashed the fed funds rate by 100 basis points since its initial rate cut in September. The U. S. . However, the yield on the 10-year Treasury has moved in the opposite direction, increasing from 3-point 6 percent to 4 points 6 percent, a rarely observed difference between short-term and long-term rates.

The Fed has taken note of this divergence as well as a string of better-than-expected inflation and economic reports. Chair Jerome Powell made it clear after the bank’s December meeting that any additional rate cuts were on hold, at least for the time being.

Powell stated at his press conference following the meeting that the policy statement’s inflation-related language change was not made to convey any kind of message. Stocks and bitcoin both recovered from previous lows after his comments, with bitcoin hitting $103,000 at the conclusion of the press conference.

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