Bitcoin (BTC) remained largely stable at $39,000 on May 4 as the US Federal Reserve eased expectations of a 0.5% key interest rate hike.
Bitcoin very calm on Fed’s statement
Data from Cointelegraph Markets Pro and TradingView shows that BTC/USD exhibited minimal volatility as the Fed confirmed that many had already “priced” the market.
Contrary to previous comments by the Federal Open Market Committee (FOMC), the May 4 statement did not create major volatility in the crypto markets. Traders struggled the most, trading just under $39,500.
At the time of writing, bitcoin is trading at similar levels. All day.
“With the appropriate strengthening of the monetary policy stance, the Committee expects inflation to return to its 2% objective and the labor market remains strong,” the FOMC confirmed in an official statement.
“In support of these goals, the Committee decided to increase the target range for the federal funds rate from 3/4 to 1 percent and estimated that an ongoing increase in the target range would be appropriate. In addition, the Committee began to lower it.” It decided to reduce the holdings of Treasury securities and agency debt and agency mortgage-backed securities on June 1, as described in a plan to reduce the size of the Federal Reserve’s balance sheet issued with this statement.
While room for volatility remained, Fed Chairman Jerome Powell did not speak for an hour after the statement was issued.
In anticipation of Powell’s comments, Content Indicator, an on-chain analytics resource, argued that it still doesn’t pay to be long BTC on a shorter time frame.
Give #B T c All doubts here the trend is for profit, but note that the earlier bull reversals had higher bid volume and depth than we have now. If you are long, you either need a longer view or need a tighter stop. Powell speaks in 30 minutes. #May the 4th be with you https://t.co/VzE3V2kA8Q pic.twitter.com/sp1kqDRBrz
— Content Indicator (@MI_Algos) 4 May 2022
Stocks, with which crypto continues to exhibit considerable correlation, were in an upbeat mood amid the absence of surprise moves by the Fed.
The S&P 500 put in a slight jump to trade up 0.4% at the time of writing, while the Nasdaq 100 gained a modest 0.2%.
“Fed raised rates with 0.50%, but also started quantitative tightening from June 1. Everything as expected, QT starts a little later. The actual event price was already there,” said Cointelegraph contributor Michael van De pope couple In the Twitter comments part.
“Tighten till nothing breaks”
Others were less comfortable with the Fed’s way.
RELATED: Bitcoin Nervously Waits for the Fed as Paul Tudor Jones Says That ‘Clearly Don’t Own’ Stocks, Bonds
Analyzing the implications of price hikes, economist Lynn Alden indicated that risks lead to a new crisis-like moment when growth would bring serious risks of its own.
All this is subject to adjustment based on economic and financial conditions.
Basically tighten until something breaks.
— Lynn Alden (@LynAldenContact) 4 May 2022
On the subject of inflation, meanwhile, Alden couple That was the “greatest disconnect” in inflation levels compared to central bank key rates since the time of World War Two.
The outlook for bitcoin, as Cointelegraph reported, remains on a downward slant before a subsequent recovery as stocks suffer from Fed tightening.
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