Bitcoin, Ether Spike After Fed Announce No Change To Interest Rates
15 Dezembro 2021 - 07:22PM
NEWSBTC
The price of major cryptocurrencies soared on Wednesday after the
Federal Reserve announced that it will accelerate the tapering of
its asset purchases, with the program set to expire in March, and
that the benchmark interest rate would be raised three times next
year. Following the Fed’s announcement, Bitcoin soared from roughly
$47,800 to over $49,350. The cryptocurrency is currently worth
$49,080, up 2.2 percent in the last 24 hours. Ethereum was at above
$4k at press time. Tapering Scared Investors Off The crypto market
may have already factored in the Fed’s decision to accelerate
tapering. Bitcoin has lost more than a quarter of its value since
hitting an all-time high of $68,991 in November. Ether has dropped
more than 15% from its all-time high of $4,865.6. Major
cryptocurrencies were likely to surge if the Fed was less
aggressive than the market predicted, according to several traders.
“We’ve been in a risk-off environment in bitcoin and the crypto
asset broadly over the last month,” Louis LaValle, managing
director at crypto fund manager 3iQ Digital Assets, said. “If the
FOMC (Federal Open Market Committee) meeting doesn’t make
blockbuster headlines, that could be a buying opportunity for those
on the sidelines.” Powell stated in November that the Fed will
“start to reduce the pace of asset purchases,” prompting many to
believe that an interest rate hike would be announced at today’s
meeting. President Biden recently re-nominated Federal Reserve
Chair Jerome Powell for a second term Related article | New COVID
Variant FUD Drives Bitcoin Down To $54k The reverse of Quantitative
Easing programs, such as asset purchases and so-called “money
printing” is known as tapering. Each month, the Fed buys $40
billion in US Agency Securities and $80 billion in US Treasury
Securities. Stock prices have fallen as a result of the anxieties,
as tapering tactics are known to trigger economic downturns.
According to today’s Fed statement, the interest rate will continue
around zero until complete employment recovery to pre-Covid levels
is achieved. With new instances of the Omicron Covid variant
reaching record highs in both the United States and the United
Kingdom today, this is unlikely to happen anytime soon Bitcoin
Spikes | Source: BTCUSD on TradingView.com Bitcoin Is Seen As Hedge
But Volatility Threatens Many investors consider the largest
cryptocurrency by market cap to be a hedge against inflation, owing
to the belief that its supply is strictly limited by the
programming embedded into the underlying blockchain. The Federal
Reserve’s human-decided monetary policies, which have inflated its
balance sheet to approximately $8.7 trillion, more than double
where it was in early 2020, contrast with that hard-coded
procedure. However, because bitcoin is seen as a hazardous asset,
traders believe that loose monetary policies encourage investors to
make larger speculative wagers. A shift away from these “dovish”
policies could be a drag on bitcoin. It’s also unclear whether an
unusually high number of Covid-19 cases will frighten financial
markets, and if so, whether a Bitcoin bloodbath will follow suit,
as it did in March 2020. Related article | Why Bitcoin Could Be
Stronger Than Ever After COVID-19 Pandemic Passes Featured image
from Unsplash.com, charts from TradingView.com
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