As an experienced financial analyst, I closely monitor central bank decisions and their impact on various asset classes, including Bitcoin. The Federal Reserve’s decision to maintain its benchmark interest rate came as no surprise to many market participants. However, the confirmation that they plan to slow down the rate at which they sell US Treasury securities starting in June caused a brief dip in Bitcoin’s price earlier in the day.
At the much-awaited Federal Open Market Committee Meeting (FOMC) on Wednesday, the Federal Reserve opted to keep its key interest rate steady between 5.25%% and 5.5%, despite Bitcoin experiencing a significant drop of around 6% in value earlier that day.
Within five minutes of the announcement, Bitcoin’s price rose from $57,300 to $57,700
- Per a press release, the central bank said it also plans to slow down the rate at which it sells US Treasury securities starting in June, reducing its monthly redemption cap from $60 billion to $25 billion.
Market participants overwhelmingly expected the Fed to maintain its interest rate at 5.25% heading into the meeting, expecting cuts to potentially take off in Q4.
However, words from the central bank confirmed market fears that the central bank may have to keep rates higher for longer to quell nationwide price inflation, which remains stubbornly above 3%.
“The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent,” the Fed wrote.
The economy also remains surprisingly resilient: data compiled by Bloomberg Intelligence suggests that 81% of S&P 500 companies that have filed their Q1 earnings have beaten their first-quarter expectations.
Bitcoin’s price is known to be influenced by central bank policy and macroeconomic liquidity conditions.
Some analysts like BitMEX co-founder Arthur Hayes believe BTC will continue to surge past $100,000 as central bank balance sheets continue to expand.
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2024-05-01 21:14