Bitcoin (BTC) saw heavy volatility on March 22 as the United States Federal Reserve hinted that it may stop interest rate hikes.
Powell on rates: “‘May’ and ‘some’ instead of ‘ongoing'”
During an ongoing press conference, Fed Chair Jerome Powell appeared to play down the ongoing U.S. banking crisis and its aftermath, while hinting that the day’s interest rate hike may be the last.
Powell said in prepared remarks the Fed believes that “events in the banking system over the past two weeks are likely to result in tighter credit conditions for households and businesses, which would in turn affect economic outcomes.”
“It is too soon to determine the extent of these effects, and therefore too soon to tell how monetary policy should respond,” he stated.
“As a result, we no longer state, that we anticipate that ongoing rate increases will be appropriate to quell inflation. Instead, we now anticipate that some additional policy firming may be appropriate.”
BTC/USD initially saw local lows of $27,867 on Bitstamp around the events before returning to trade above $28,000, only to continue falling at the time of writing as markets continued to digest Powell’s responses to press queries.
On rate hikes specifically, he said that the terms “may” and “some” as opposed to “ongoing” would be best to describe future policy.
Markets taking Fed decision as slightly dovish as forward guidance statement makes pause in May more likely. Fed now says that “some additional pol firming may be appropriate.” This is downgrade from prior statement. Dollar drops, Gold, Bitcoin, stocks rise, Yield curve steepens. pic.twitter.com/5jpIbunveI
— Holger Zschaepitz (@Schuldensuehner) March 22, 2023
Reacting, some commentators nonetheless described Powell’s Fed as “hawkish” in placing inflation above the banking crisis by continuing hiking.
“The Fed have shown thus far, that they are committed to rates higher for longer + inflation as enemy #1,” Tedtalksmacro wrote in part of Twitter follow-up.
BTC price comes full circle
Bitcoin thus did not deliver the trip to $30,000 which some had hoped for in the run-up to the rate hike decision.
“Shorts liquidated then longs liquidated. Back to the same price we were an hour ago,” analyst Matthew Hyland summarized.
Data from monitoring resource Coinglass put the total crypto liquidations for the day at $36 million and $78 million for shorts and longs, respectively.
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