Bitcoin Defends $66,000 as Fed Leaves Interest Rates Unchanged

full version at beincrypto

Bitcoin (BTC) held above $66,000 after the Federal Open Market Committee’s (FOMC) decision on Wednesday. The Federal Reserve (Fed) decided to keep interest rates unchanged at 5.25%—5.50% for the eighth consecutive meeting.

The Fed’s decision comes amid cautious optimism after indicating no rush to lower rates until it has gained greater confidence inflation is moving sustainably toward its 2% target.

Fed Leaves Interest Rates Unchanged

The FOMC voted unanimously to keep its benchmark overnight borrowing rate between 5.25% and 5.50%. The market’s pulse quickened as the Fed reinforced its strategy. The highlight of the event, however, was Fed chair Jerome Powell’s press conference, which leaned toward a dovish stance.

Nevertheless, the Fed did not explicitly signal a September rate cut. In addition to leaving interest rates unchanged, however, the Fed chair delivered important clues about the policy-easing strategy for the remainder of 2024. Powell demonstrated increasing but cautious optimism about disinflation progress resuming in the second half of 2024.

After the soft inflation prints recorded in the second quarter, key highlights from the July 30-31 meeting include:

Strong commitment to taking inflation to the 2% goal.
Economic activity continues to expand at a solid pace.
Attentive to risk on both sides of the dual mandate- maximum employment and stable prices
Inflation has been downgraded from “elevated” to “somewhat elevated”
The committee will assess incoming data and the balance of risks
Decision to be made on a meeting-by-meeting basis to avoid backfiring
It is a question of seeing more good data
Rate cut could be on the table in September
The path ahead is going to depend on the way the economy evolves.

As BeInCrypto reported on Powell’s previous appearance, the Fed chair had acknowledged “some more progress on taming inflation in the second quarter.” He also indicated having had three better readings, averaging to “a pretty good place.” While Powell did not outright confirm a rate cut in September, he has not pushed back against this expectation.

“The Committee judges that the risks to achieving its employment and inflation goals continue to move into better balance,” the Federal Open Market Committee’s post-meeting statement said, marking a slight upgrade from previous language.

Bitcoin barely moved in the immediate aftermath of the announcement, suggesting its impact was already priced in. The CME FedWatch Tool indicated traders had anticipated that interest rates would remain unchanged at 5.25% to 5.50% after sentiment pointed to lower policy rates only beginning in September.

Powell has a relatively dovish tone on the future, through which a rate cut is on the table for September, Michael Van de Poppe commented.

In hindsight, Bitcoin dropped in the days ahead of each FOMC, with three of the four rate decisions marking local bottoms following those corrections.

With the Fed’s hands steady on the monetary levers and a vigilant eye on economic indicators, the market looks forward to a potential era of stability and growth. This scenario sets the stage for Bitcoin to pursue new yearly heights, with the $70,000 range firmly within its crosshairs.