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On Wednesday, the American federal reserve decided to leave its interest rate unchanged in the range of 4.25% to 4.5% – and Bitcoin reacted instantly. The break, although widely awaited, came with a slightly revised perspective which includes a slower chronology for future rate drops and a notable adjustment to the rate of reduction in the assessment of the central bank.
According to the declaration of the Federal Open Market Committee (FOMC), the “plot” of the Fed now only indicates two reductions of 25 base points for this year – more than many market players awaited in December. The decision -makers stressed that if the interest rates remain in a restrictive territory, the time of the real cuts depends on the path of economic indicators, in particular inflation and employment.
However, the last declaration no longer claims inflation And employment is “in balance”, reflecting the growing concern of the committee concerning economic uncertainty. But perhaps the most important pivot was the announcement of the Fed that it will slow the reduction of its bond funds, commonly called “quantitative tightening»(QT).
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From April, the monthly runoff for state bonds will drop from $ 25 billion to $ 5 billion – a substantial recovery that many analysts consider a prelude to a more accommodating position if economic or market conditions deteriorate.
What it means for Bitcoin
Shortly after the Fed’s announcement, Bitcoin joined around 4 to 5%, briefly exceeding the level of 86,000 USD. Nik Bhatia – founder of the Bitcoin layer and author of Bitcoin Age – did his last video update To dissect the implications of the decision. “Bitcoin increased by 4% on the news that the Fed slowed down and is still determined to reduce interest rates,” said Bhatia at the start of its analysis, noting that the market had been laser focused on the question of whether the central bank would modify its quantitative tightening approach.
Bhatia explained how the reduction in the monthly runoff from 25 billion to $ 5 billion can loosen the liquidity constraints in the global system: “Now, the Fed also contracts its balance sheet, but it will now only do five billion per month, against 25 billion per month, and it is a significant change,” he said.
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“It’s not a bit,” hey, we are at the dawn of Qe now because we have gone from 25 to five “, but the first step is to ensure that the assessment ceases to shrink … so that if the Fed must pivot, it can go quickly from 5 billion qt per month to a modest expansion.”
Bhatia stressed that such a decision can feed the market risk appetite: “The market sees the Fed for what it is: it supports credit creation that widens the balance sheets around the world, and this flow ends up asset prices … Some of these assets can be actions, Bitcoin -[and] Other financial assets.
Other experts are even more drastic in their evaluation. The co-founder of Bitmex Arthur Hayes declared Via X: “Jaypow delivered, qt mainly on April 1.
Jamie Coutts, chief analyst of crypto at Realvision, roughly agree: “After last night, Qt was actually dead (for a while). The volatility of the treasury fell and now reflects the Doxy decline Earlier this month. All this is extremely positive. »»
At the time of the press, Bitcoin exchanged $ 85,881.
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