BTC Briefly Soars On FED Announcement But Then Falls Back Down

BTC briefly soars on FED announcement which said it still plans to raise interest rates when it will also wind down the stimulus program so let’s read further in today’s latest Bitcoin news.

The Federal Reserve announced that the interest rates will remain at 0% with the first-rate hike planned for March. The press release coincided with a spike in the BTC price from under $37,800 to $39,200 in only 20 minutes but as quickly as the price increased, it fell back to its previous price. After the FED announcement, pretty much nothing changed. The crypto and stock prices increased when the Fed said it will start raising the rates and wind down on pandemic-era bond purchases while BTC went from $47,000 to almost $49,000 in a few hours.

In the first week of January when the only released meeting was put on the target date in March, equities markets closed lower and BTC dropped by 6%. today’s Meeting of the FED Open Market Committee repeated what has been suggested for a while now and in order to bring inflation that hit 7% in December back to 2% while maintaining high levels of employment, the FED will raise interest rates by 0.25% per quarter.

BTC briefly soars on the FED news but investors soon enough understood that nothing has been changed rally. The federal funds rate is the rate at which the banks can borrow money from each other’s reserves overnight. The rising interest rates have a knock-on effect on the economy and contribute to the increasing credit card interest rates with mortgage costs for consumers that probably have less to invest in stocks or crypto this year. The committee also declared that it will end its asset purchases that had the effect of increasing the money supply in the US back in March.

Unlike the crypto markets, equities markets swung back into negative territory but given the up and down week on Wall Street, it is still unclear whether they will stay there.

Also, As Bitcoin tops $39,000, the situation seems bullish but it could be shaky because the Federal Reserve meeting just happened. In it, the central bank said it will be no more changes to the interest rates but they will be increased in March. This caused some insane volatility in the crypto and stock markets and BTC dropped by $3000 in a few hours. It reclaimed $36,000 and it is still 3.5% down on the day. Its market cap is just below $700 billion.

Source: https://www.dcforecasts.com/bitcoin-news/btc-briefly-soars-on-fed-announcement-but-then-falls-back-down/