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Fed Leaves Rates Unchanged, Sounds Hawkish Note on March
Bitcoin investors have mostly been focused on spot ETFs and the upcoming halving, but central bank monetary policy is also likely to play a sizable role in the 2024 price outlook.
Updated Mar 8, 2024, 8:50 p.m. Published Jan 31, 2024, 7:08 p.m.
The U.S. Federal Reserve on Wednesday, as expected, held policy steady, leaving its benchmark fed funds rate range unchanged at 5.25%-5.50%, but perhaps dented market hopes of a rate cut at its next meeting in March.
"The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent," said the central bank in its policy announcement.
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Though market watchers universally expected the Fed to remain on hold today, the outlook is quite a bit different for the remainder of the year. Prior to today's news, investors had priced in nearly a 65% chance of at least one 25 basis point rate cut at the Fed's next meeting in March, according to the CME FedWatch Tool. In addition to that, investors are anticipating a series of Fed rate cuts throughout the remainder of 2024. Shortly after the policy announcement, those March rate cut odds had been trimmed to just over 50%.
The price of bitcoin was little-changed in the minutes following today's Fed announcement, continuing at about $43,500. Bitcoin has been volatile of late, but is roughly flat over the past several weeks. That time frame has been dominated by the run-up to the spot ETF approvals and then the initial weeks of trading for those vehicles. Bulls are hopeful that a string of rate cuts, alongside demand from the new ETFs and the upcoming April halving (at which fresh daily bitcoin supply will be reduced by 50%), could set off a fresh run to new highs.
A check of traditional markets finds the S&P 500 and Nasdaq at about session lows, down 1% and 1.5%, respectively.
Five Democratic Senators earlier this week threw their hats in the monetary policy ring. First, Sen. Elizabeth Warren (D-Mass) led a group of four urging Fed Chair Jerome Powell to cut "astronomical rates." Then yesterday Sen. Sherrod Brown (D-Ohio), chairman of the Senate Banking Committee, requested similar action.
Powell's post-meeting press conference, at which he'll likely to be asked about those Senatorial concerns, begins at 2:30 pm ET.
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Asia Morning Briefing: Fed Cut Brings Little Volatility as Bitcoin Waits for Japan
CryptoQuant data shows seller exhaustion as whales pull back from exchanges, while traders prepare for a closely watched BOJ meeting that could influence global liquidity.
What to know:
- Bitcoin remains stable above $91,000 as the Federal Reserve cuts rates by 25 basis points.
- Market attention shifts to Japan, where a rate hike is expected at the upcoming Bank of Japan meeting.
- Gold prices rise following the Fed's rate cut, while silver hits a record due to strong demand and tight supply.
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