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most market participants Latest Fed Policy Announcements Unexpectedly dovish, as the USD and US yields fell, the Bitcoin market reacted by “selling the facts”, BTC price dropped sharply and protracted liquidations surged.
According to CoinGecko, BTC/USD last traded in the mid-$27,000s before briefly dropping to the $26,600s, down about 2.2% over the past 24 hours.
About $60.2 million long Bitcoin futures positions were liquidated in the first two hours after the Fed announced its policy, according to crypto derivatives analytics site coinglass.com.
Long liquidations on the day were around $85 million, the highest level since the 8th.th of March.
Federal Reserve pushes rate hike but comes across as Davish
The Federal Reserve (Fed) raised its benchmark rate range by 25 bps as expected to 4.75-5.0%, but acknowledged that recent US bank troubles added downside risks to the economic outlook. He softened his remarks about the prospect of further rate hikes.
It previously said “continued increases” were appropriate, but now says “some” additional policy enhancements “might be appropriate.”
The Fed left unchanged its quantitative tightening schedule, which allows $95 billion of maturing assets to move off its balance sheet each month, but noted inflationary pressures continued to build.
Finally, the median forecast from the Fed’s new dot plot showed that the central bank sees rates at 5.1% at the end of the year. This is unchanged from his December dot plot and below the consensus market forecast of 5.4%.
This, combined with the Fed’s change in wording, seemed enough to provoke a dovish reaction in currency and bond markets. The US Dollar Index (DXY) dropped about 0.6% near 102.50 at the end of the day, while his 2-year yield in the US fell 23 bps to put him below 4.0%.
In the U.S. money markets, pricing has taken a dovish turn as to where U.S. interest rates are likely to go this year.
The chances of the Fed embarking on a 50-75 bps rate hike by the end of 2023 are now set at about 65%, compared to about 50% a day ago, according to the CME’s Fed Watch Tool.
Bitcoin bulls likely to buy dip, $30,000 in sight?
Ahead of the Federal Reserve Board meeting, Bitcoin price was at the forefront, hitting a nine-month high early in the session at $28,900.
With the US Federal Reserve (Fed) meeting suspended, many traders appeared to be looking to profit, with some calling it a “fact-selling” reaction to the dovish meeting.
Of course, Wednesday’s U.S. equity market sell-off could also weigh heavily on cryptocurrencies, even though the correlation between the two asset classes has weakened significantly in recent times.
The fall in stocks was sparked by a drop in bank names after US Treasury Secretary Janet Yellen commented: Government not considering extending deposit insurance From the current $250,000 per account to cover all deposits.
The comments raised concerns among bank customers that deposits (above $250,000) were unsafe, increasing the risk of bank runs and likely explaining the decline in bank stocks.
But Wednesday’s resurgence of US bank stability concerns is likely to attract bitcoin dip buyers.
In fact, since the collapse of three US banks earlier this month, Bitcoin has served as a safe haven against instability in the traditional financial sector.
If US bank stocks continue to fall, it may not be long before BTC hits $30,000 or hits the next major resistance area near $32,500 to $33,000.
Given Bitcoin’s traditionally negative correlation to USD and US yields, the downside of both of these traditional assets fuels the chances of Bitcoin’s price rebounding to multi-month highs. To do.