Bitcoin Price Bounces Back Following Federal Reserve’s Decision Not to Raise Rates During FOMC Meeting

The Federal Reserve has decided to maintain its benchmark interest rate at 5.25% to 5.5% at the highly anticipated Federal Open Market Committee Meeting (FOMC) on Wednesday, following a 6% drop in Bitcoin’s price earlier that day. Within five minutes of the announcement, Bitcoin’s price rose from $57,300 to $57,700.

Per a press release, the central bank also plans to slow down the rate at which it sells US Treasury securities starting in June, reducing its monthly redemption cap from $60 billion to $25 billion. Market participants overwhelmingly expected the Fed to maintain its interest rate at 5.25% heading into the meeting, with expectations of potential cuts in Q4. However, the central bank’s statement confirmed fears that rates might need to remain higher for a longer period to control inflation, which is still above 3%.

“The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent,” the Fed stated. Despite this, the economy has shown resilience, with 81% of S&P 500 companies beating Q1 earnings expectations.

Bitcoin’s price is influenced by central bank policy and macroeconomic liquidity conditions. Some analysts, like BitMEX co-founder Arthur Hayes, believe that BTC will surpass $100,000 as central bank balance sheets continue to expand.

BTC / USD. Source: TradingView

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