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Crypto Market Surges as Federal Reserve Pauses Interest Rate Hikes
- In the latest FOMC meeting, the Federal Reserve maintained interest rates, with Jerome Powell suggesting a potential easing of monetary tightening due to quicker-than-expected inflation decline.
- Powell’s optimistic remarks on easing monetary policies have positively impacted the crypto market, with major assets recovering from recent losses and displaying bullish sentiment.
- Although some concerns of persistent inflation remain, Bitcoin made notable gains yet was trumped by altcoins like Cardano, Bonk, and Helium.
Santa Comes Early: KPMG
The Federal Reserve kept interest rates the same in the latest, much anticipated FOMC meeting. Jerome Powell, the U.S. central bank chief, indicated that the intense phase of tightening monetary policy might be ending, as inflation decreases quicker than expected. Discussions about reducing borrowing costs are emerging.
Inflation has eased from its highs and this has come without the significant increase in unemployment – that’s very good news. But inflation is too high, ongoing progress in bringing it down is not assured, and the path is uncertain.
Fed Chair Jerome Powell The majority of Fed policymakers anticipate lower rates by the end of 2024, with none expecting an increase. Policymakers’ view of economic risks has shifted towards a more balanced perspective. Powell emphasised the importance of both of the Fed’s mandates and the risk of excessively slowing down the economy. Diana Swonk, chief economist at KPMG said “Powell played Santa Claus early,” in comments to the meeting.
Crypto Twitter Reacts
Powell’s remarks are encouraging, and highlight that the worst pain might be over – for now. The crypto market certainly reacted positively and currently most major assets are in solid green. The dip buying opportunity seems to have been very short-lived since most of the losses during the recent correction have been re-gained. Overall, the sentiment in crypto is bullish, on the back of the rates news and ETF anticipations.
However even with rate hikes on hold, current price levels may not be temporary but are likely to be sustained or even increase. This could imply a concern about persistent inflation, where prices continue to rise over time. Yet, investors seem unphased and are buying up what they can – in what appears to be pent-up demand.
Meanwhile, Bitcoin gained almost 5% in the past 24 hours, but was outperformed by massive gains in altcoins. Cardano (ADA) gained 17%, Bonk (BONK) gained 40% and Helium (HNT) also gained 24%.
Author
Aaron Feuerstein
Aaron Feuerstein is a freelance writer based in Melbourne. His focus is on decentralised finance and the regulatory space surrounding blockchain. He holds a Master's in Accounting. When he is not studying the latest legal case, he enjoys his time as a modest but eager hobby cook.
