The Fed blinked: the return of Bitcoin Bull Run is now inevitable

On Wednesday, the United States Federal Reserve decided to leave its reference interest rate without changes in the range of 4.25% –4.5%, and bitcoin reacted instantly. The pause, although widely planned, came with a slightly revised perspective that includes a slower timeline for future rates cuts and a notable adjustment to the rhythm of reduction of the central bank balance.

According to the Declaration of the Federal Open Market Committee (FOMC), the “plot” of the FED now indicates only two 25 cuts of basic points fees for this year, just failures of what many market participants expected in December. Policy formulators emphasized that although interest rates remain in restrictive territory, the moment of real cuts depends on the path of economic indicators, particularly inflation and employment.

However, the last statement no longer states that inflation and employment are “in balance”, reflecting the growing concern of the committee for economic uncertainty. But perhaps the most significant pivot was the announcement of the Fed that it will delay the reduction of its links of links, commonly known as “quantitative adjustment” (QT).

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As of April, the monthly runoff for government bonds will fall from $ 25 billion to $ 5 billion, a substantial descending change that many analysts consider a prelude to a more accommodating position if the economic or market conditions deteriorate.

What this means for bitcoin

Shortly after the announcement of the Fed, bitcoin recovered approximately 4–5%, briefly exceeding the USD 86,000 level. Nik Bhatia, founder of the bitcoin layer and author of bitcoin Age, struggled for her last <a target="_blank" href="https://x.com/TheBitcoinLayer/status/1902549216997863829″ target=”_blank” rel=”nofollow”>Video update to dissect the implications of the decision. “bitcoin increased 4% in the news that the Fed slows down the QT and is still committed to reducing interest rates,” Bhatia said at the beginning of his analysis, noting that the market had focused on the laser if the central bank would modify its quantitative adjustment approach.

Bhatia explained how the reduction of the monthly runoff limit from $ 25 billion to $ 5 billion can loosen the limitations of liquidity in the general system: “Now the Fed is also hiring its balance sheet, but now it will only do it five billion a month a month instead of 25 billion per month, and that is a material change,” he said.

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“This is not something, 'hey, we are at the cusp of which now just because we go from 25 to a five, but the first step is to get the balance to stop shrinking … so that if the Fed needs pivotar, it can quickly go from 5 billion in QT per month to a modest expansion.”

Bhatia stressed that such movement can feed the market risk appetite: “The market sees the Fed for what it is: it admits the creation of credit that expands balances worldwide, and that flow ends in the prices of assets … Some of those assets can be shares, bitcoin, (and) other financial assets.”

Other experts are even more drastic in their evaluation. Bitmex co -founder, Arthur Hayes, <a target="_blank" href="https://x.com/CryptoHayes/status/1902564099592220793″ target=”_blank” rel=”nofollow”>fixed Through x: “Jaypow delivered, QT basically more than April 1. The next thing we must caress for enhance is the exemption of SLR and a restart of QE. It was btc $ 77K in the background, prob. But prob that the stonks will be more pain to which Jay becomes completely so that Trump, so he remains animated and charged.”

Jamie Coutts, Chief of Cryptographic Analyst of Realvision, practically <a target="_blank" href="https://x.com/Jamie1Coutts/status/1902537475660366032″ target=”_blank” rel=”nofollow”>OK: “After last night, QT is effectively dead (for some time). Treasury volatility has been withdrawn and now reflects the decrease in DXY earlier this month. All this is extremely positive liquidity.”

At the time of publication, bitcoin quoted at $ 85,881.

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