Federal Reserve Holds Steady: Impact on Bitcoin

BTC remained stable, and experts suggest that the Fed may be nearing the end of its rate-hiking cycle, reducing intraday volatility for BTC.

Federal Reserve Holds Steady: Impact on Bitcoin
Federal Reserve Holds Steady: Impact on Bitcoin

On Wednesday, the Federal Open Market Committee (FOMC) of the U.S. Federal Reserve left its benchmark fed funds rate range unchanged at 5.25 percent to 5.50 percent.

FOMC policy statement: “Tighter financial and credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation.”

The magnitude of these effects is still unknown. The Committee continues to pay close attention to inflation risks.

The central bank’s nod towards risks to economic growth is nearly identical to its previous policy statement in September, suggesting that it will be incoming data that will decide whether there’s another pause or rate hike at its December meeting.

According to data, Bitcoin (BTC) remained relatively unchanged following the news, trading just above $34,500.

K33 Research, a crypto analytics firm, asserts that the Fed is likely nearing the end of its rate-hiking cycle, which has diminished the intraday volatility of bitcoin on FOMC decision days.

“Fed interest rate decisions have seen a reduced medium-term directional impact on BTC as correlations reign moderately,” K33 analysts Anders Helseth and Vetle Lunde noted in a market preview Tuesday.

“We continue to anticipate a significant intraday volatility contribution from the FOMC meeting on Wednesday, as the market typically reacts with bursts of highly correlated and elevated volatility during FOMC hours.”

The upcoming press conference of Federal Reserve Chairman Jerome Powell will provide market participants with insight into the future course of U.S. central bank policy.

Fed speakers have hinted in recent weeks that they are leaning toward one more rate hike before concluding a historic rate hike cycle.