Bitcoin Price Surge After Fed Rate Cut

Bitcoin (BTC) price spiked immediately after the U.S. Federal Reserve cut interest rates by 50 basis points on Wednesday.

The Federal Open Market Committee (FOMC) followed predictions from economists and traders by lowering the benchmark federal funds rate to a range between 4.75% and 5.00%.

In a statement, the central bank noted:

“Recent indicators suggest that economic activity has continued to expand at a solid pace. Job gains have slowed, and the unemployment rate has moved up but remains low. Inflation has made further progress toward the Committee’s 2 percent objective but remains somewhat elevated.”

The FOMC expressed increased confidence that inflation is moving sustainably toward 2 percent, noting that risks to employment and inflation goals are roughly balanced.

On potential further rate cuts, the Committee stated:

“In considering additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. We will continue reducing our holdings of Treasury securities, agency debt, and agency mortgage-backed securities.”

The FOMC also committed to monitoring incoming information that could impact economic outlook, asserting readiness to adjust monetary policy if necessary.

Fed Chair Jerome Powell is scheduled to hold a press conference at 2:30 p.m. ET.

Analysts Predict Short-Term Market Volatility

QCP Capital analysts anticipate that the recent Fed decision will have a significant medium to long-term impact on financial markets, predicting heightened short-term volatility.

They stated:

“We are confident that volatility will be high in the days following the meeting, as traders readjust their positions. This regime change could also signal the start of strong macro trends.”

While short-term volatility and price drawdowns are expected, analysts recommend that investors focus on long-term strategies with substantial upside potential to exploit possible increases in bitcoin prices.

“While drawdowns and high volatility are expected, don’t let it detract from the path to higher bitcoin prices, and we favor long-dated structures with unlimited upside to capitalize on potential parabolic advances in bitcoin prices.”

Equities Rise After Fed Decision

Major stock indices also rose following the Fed’s rate cut. As of midday trading in the U.S. on Wednesday:
– The S&P 500 gained 0.6%.
– The Nasdaq Composite rose 0.78%.
– The Dow increased by 0.5%.

The CBOE Volatility Index (VIX), which measures expected volatility of the S&P 500 over the next 30 days, rose by 4.4% to 18.39 points. Gold prices also climbed 0.6% to $2,586.08 per ounce.

At publication, Bitcoin was trading around $60,558.51, according to The Block’s bitcoin price data.