02/06/2024
Bitcoin Blasts Through $23.5K as Powell Speaks Following Fed Rate Hike
The U.S. central bank earlier Wednesday lifted its benchmark interest rate 25 basis points.
Bitcoin jumped $700, moving above $23,600, as Federal Reserve Chair Jerome Powell suggested the U.S. central bank is seeing signs of waning inflation.
Prior to Powell speaking, the Federal Open Market Committee – as expected – lifted its benchmark interest rate by 25 basis points to a new range of 4.5%-4.75%, the highest level in 15 years. In its policy statement, the central bank said “ongoing increases” in borrowing costs will be necessary to further cool inflation.
Data from the CME Group now shows investors pricing in an 86% chance of another 25 basis point rate hike to a range of 4.75%-5.00% at the FOMC’s March meeting.
At his post-meeting press conference, Powell led off in a hawkish fashion, reminding reporters of the destructive nature of inflation and promising the Fed’s commitment to bringing inflation down to the 2% target.
Further along in the press conference, however, Powell said that “[the] disinflationary process has started.” Those words sent bitcoin and traditional equity markets sharply higher.
The largest cryptocurrency by market capitalization, bitcoin (BTC) was trading as high as $23,627 following the comments, up more than 2% for the day. At press time, it’s settled back to $23,600. The Nasdaq is now ahead 2.6% and the S&P 500 1.6%.
Ether (ETH), the native token of the Ethereum blockchain, rose 3% to trade at $1,635 as of press time.
Crypto-exposed stocks also gained, with exchange Coinbase (COIN) rising 8% and bitcoin miner Marathon Digital Holdings (MARA) up 7%.
