Bitcoin Regains Momentum After Initial Decline Following Fed’s Hawkish Policy Announcement
Bitcoin saw a brief drop after the Federal Reserve’s latest policy update, which signaled a continued cautious approach to inflation, but quickly rebounded as the day unfolded.
The U.S. Federal Reserve announced that it would keep the fed funds rate unchanged at 4.25%-4.50%, marking its first pause in rate hikes since the policy easing began last September.
In the statement, the Fed highlighted that the unemployment rate remained at a “low level,” while inflation was still “somewhat elevated.” The shift in language was seen as hawkish, especially as it removed the previous reference to “progress” in bringing inflation back to the 2% target, signaling that the Fed is cautious about inflationary pressures.
Bitcoin (BTC) initially fell to $101,800 in reaction to the Fed’s statement, with U.S. stocks also sliding—Nasdaq dropping by 1.1% and the S&P 500 retreating 0.9%. The dollar and gold prices were little changed, while the 10-year Treasury yield climbed 5 basis points to 4.59%.
Since the first rate cut in September, the Fed has reduced rates by 100 basis points, but the 10-year Treasury yield has increased, rising to 4.6% from 3.6%, creating a rare divergence between short-term and long-term rates.
During his press conference, Fed Chair Jerome Powell clarified that the change in language about inflation wasn’t intended to signal any shift in policy direction. Following Powell’s remarks, both Bitcoin and stocks recovered from earlier losses, with Bitcoin rising above $103,000 by the end of the press conference.
