Bitcoin (BTC) experienced major volatility on March 22 when the United States Federal Reserve hinted that it might halt interest rate hikes.
Powell on rates: “‘May’ and ‘some’ instead of ‘ongoing'”
Data from Cointelegraph Markets Pro and TradingView It showed sharp moves both up and down for BTC/USD as the Federal Reserve rallied an anticipated 25 basis points.
During a press conference, Fed Chairman Jerome Powell appeared to downplay the current US banking crisis and its aftermath, while hinting that today’s interest rate hike may be the last.
In prepared remarks, Powell said the Fed believes “events in the banking system in the past two weeks are likely to result in tighter credit conditions for households and businesses, which in turn would affect economic outcomes.”
“It is too early to determine the extent of these effects, and therefore too early to say how monetary policy should respond,” he said.
“As a result, we are no longer stating that we anticipate that ongoing rate increases will be appropriate to quell inflation. Instead, we now anticipate that further tightening of policy may be appropriate.”
BTC/USD initially saw local lows of $27,867 on Bitstamp around the events before trading back above $28,000, only to continue falling as of this writing as markets continued to digest Powell’s responses to press inquiries.
Specifically on rate increases, he said the terms “may” and “some” rather than “ongoing” would be better to describe future policy.
Markets view the Fed’s decision as slightly dovish as the forward-looking statement makes a pause in May more likely. The Fed now says that “some additional policy reassurance may be appropriate.” This is a downgrade of the previous statement. The dollar falls, gold, Bitcoin, stocks rise, the yield curve steepens. pic.twitter.com/5jpIbunveI
—Holger Zschaepitz (@Schuldensuehner) March 22, 2023
In reaction, some commentators nonetheless described Powell’s Fed as “hard-liners” in prioritizing inflation over the banking crisis by continuing to hike.
“The Federal Reserve has shown so far that it is committed to higher rates for longer + inflation as enemy number 1”, Tedtalksmacro wrote partly from Twitter following.
BTC price comes full circle
Bitcoin therefore did not deliver the trip to $30,000 that some had hoped for in the lead up to the rate hike decision.
Related: Will the Fed stop rate hikes? 5 things to know about Bitcoin this week
“Shorts liquidated and longs liquidated. We return to the same price we had an hour ago”, summarized the analyst Matthew Hyland.
Coinglass monitoring resource data put the total crypto liquidations for the day at $36 million and $78 million for shorts and longs, respectively.
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