TronWeekly

Crypto World News

You are here: Home / Archives for Federal Open Market Committee

Federal Open Market Committee

99% Probability: Bitcoin Bulls Brace for Fed’s Interest Rates

by

The looming shadow of the U.S. Federal Reserve’s interest rate decision has cast uncertainty over the cryptocurrency market, with Bitcoin at the forefront of concern. Renowned Chinese crypto journalist Colin Wu, known for his insightful perspectives, recently took to X to remind the community about the scheduled Federal Open Market Committee (FOMC) meeting later this week.

The FOMC meeting, set for March 20, will see Federal Reserve Chairman Jerome Powell announcing the Fed’s decision on the interest rate. However, data from the CME platform suggests a high probability—99%—that the interest rate will remain unchanged.

Bitcoin’s Resilience Amidst Fed’s Monetary Policy Shifts

The significance of this announcement cannot be understated. The Fed’s interest rate decisions wield considerable influence over financial markets, including the volatile realm of cryptocurrencies. Historically, rate tightening by the Fed has exerted downward pressure on risky assets like Bitcoin, while rate cuts tend to stimulate investment flows into BTC, thus driving its price upward.

The anticipation surrounding this decision is intensified by Powell’s recent indications of a potential shift in monetary policy. While the Fed has been tightening rates to combat inflation in recent years, Powell has hinted at a possible reversal, sparking optimism within the crypto community.

The timing of the announcement is particularly critical as Bitcoin recently surged to a new all-time high of $73,750, only to experience a sudden reversal and a subsequent 12% correction, with prices plummeting to $64,908 on Sunday. However, the cryptocurrency has since staged a modest 5% recovery, currently trading at $67,926.

Despite this volatility, the overarching narrative of Bitcoin’s potential as a hedge against traditional financial systems remains compelling. The community eagerly awaits the outcome of the FOMC meeting, recognizing its potential to shape the future trajectory of Bitcoin’s price movement.

As investors brace for the impending announcement, the resilience of Bitcoin in the face of market fluctuations underscores its status as a prominent player in the global financial landscape. Whether the Fed’s decision will serve as a boon or a bane for Bitcoin remains to be seen, but one thing is certain—its impact will reverberate throughout the cryptocurrency market.

Federal Reserve Cuts Rates to Near Zero as Coronavirus Continues its Rampage, Bitcoin Falls Again

by

The United States economy has been swaying in the wind for some time now as the country has been plagued by multiple factors. The impact of Coronavirus was a double whammy on the financial system that was already on its knees.

To ensure that the economy does not tank completely due to the closures of offices and organizations, the Federal Reserve on Sunday decided to cut the target fed fund rates again. The cut was a record-breaker because it was four times as much as the change predicted.

The Coronavirus spread has resulted in such a phase shift that countries across the globe have been bracing for effects across industries. This meant at the same time protecting the economy, the industry and the wellbeing of all people. The US-adopted Zero Interest Rate Strategy was achieved at the meeting of the Federal Open Market Committee, which was moved from Tuesday to Sunday.

The last time the US saw such a rate cut was right after the start of the 2008 global recession. Interest rates between 0 and 0.25 points were treated as markers for  shakeup in the financial ecosystem. In 2018, the rate as 2.5 percent which was routinely cut down over multiple weeks in 2020. According to an official publication by the Federal Reserve:

“Consistent with its statutory mandate, the Federal Open Market Committee seeks to foster maximum employment and price stability. The effects of the Coronavirus will weigh on economic activity in the near term and pose risks to the economic outlook. In light of these developments, the Committee decided to lower the target range for the federal funds rate to 0 to 1/4 percent. The Committee expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.”

The Fed claimed that it will continue to monitor the implications of incoming information for the country’s economic outlook. To make sure that all citizens have a level playing field, the Fed will take into account factors such as labor market conditions, indicators of inflation pressures etc. America’s financial regulators were also prepared to support the flow of credit to households and businesses.

As the Fed begins preparations to tackle the fallout of the Coronavirus spread, Bitcoin continued to drop in value. The world’s largest cryptocurrency had fallen by more than 7 percent in the past 24 hours and was trading for $4895. The total BTC market cap was $89.4 billion while the daily market volume was $37.6 billion. Bitcoin’s fall sent shockwaves across the industry because it took a massive hit despite being known as a ‘safe haven’ asset.

While Bitcoin struggled to cross the $5000 mark, the Fed also decided to buy $500 billion in US Treasury bonds. The body will also purchase $200 billion in mortgage-backed securities, an asset becoming increasingly popular in the States. Taking into account all the purchases made by the Fed, it was calculated that the Reserve’s balance was up to $5 trillion.

Only time will tell if the current pandemic scare continues to affect world industries. Regions such as Italy and Spain continued to report new cases as societal lock-downs became more and more common. The Federal Reserve will hope that the virus is brought under control soon so that its effects do not become set in stone.