Bitcoin price saw swift fluctuations after the Fed hiked rates by 0.25%, but Chair Jerome Powell says that policy might now change.
Bitcoin saw massive volatility as the United States Federal Reserve hinted that it may stop interest rate hikes. The flagship crypto has lost over $1,500 within an hour.
Powell Comment On Rates: “‘May’ and ‘some’ instead of ‘ongoing’”
Data acquired from TradingView showed steep moves both up and down for Bitcoin as the Fed hiked interest rates by an expected 25 basis points.
In the latest press conference, Fed Chair Jerome Powell seemed to play down the ongoing United States banking crisis and its aftermath while hinting that the day’s interest rate hike might be the last.
In prepared remarks, Powell stated that the Fed thinks:
“Events in the banking system over the past two weeks are likely to result in tighter credit conditions for households and businesses, which would in turn affect economic outcomes.”
He said:
“It is too soon to determine the extent of these effects, and therefore too soon to tell how monetary policy should respond.”
“As a result, we no longer state that we anticipate that ongoing rate increases will be appropriate to quell inflation. Instead, we now anticipate that some additional policy firming may be appropriate.”
Bitcoin initially saw local lows of $27,867 on Bitstamp around the events before it returned to trade above $28,000, only to continue dropping at the time of publication as markets continued digesting Powell’s responses in the press inquiries.
So far, Bitcoin has dropped to $26,727 and the market sentiment now seems to be turning negative.
On the rate hikes particularly, he stated that the terms “may” and “some” as opposed to “ongoing” would be ideal to describe future policy.
Markets taking Fed decision as slightly dovish as forward guidance statement makes pause in May more likely. Fed now says that “some additional pol firming may be appropriate.” This is downgrade from prior statement. Dollar drops, Gold, Bitcoin, stocks rise, Yield curve steepens. pic.twitter.com/5jpIbunveI
— Holger Zschaepitz (@Schuldensuehner) March 22, 2023
While reacting, some of the commentators nevertheless described Powell’s Fed as ‘hawkish’ in prioritizing inflation above the banking crisis by continuing with its hike.
Tedtalksmacro wrote in part of the Twitter follow-up:
Buy Bitcoin Now“The Fed has shown this far, that they are committed to rates higher for longer + inflation as enemy #1.”
Bitcoin Price Comes Full Circle
Bitcoin, therefore, did not deliver the trip to $30,000 some investors had hoped for in the run-up to the rate hike decision.
Matthew Hyland summarized:
“Shorts liquidated then longs liquidated. Back to the same price we were an hour ago.”
Data published by monitoring resource Coinglass put the total crypto liquidations for the day at around $36 million and $78 million for shorts and longs, respectively.
