- Crypto markets briefly rose today before taking a sharp dive in the wake of the Fed’s FOMC meeting today.
- Bitcoin and Ethereum enjoyed significant gains on the day before they were erased this afternoon.
- The Fed’s insistence on rate hikes may have put fear in some investors.
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The Fed will stick to its plan of raising interest rates in March, according to the report from this week’s Federal Open Market Committee meeting, released today. Although the move comes as no surprise, markets are rattled all the same.
Fed Rate Hikes On the Way
Crypto and traditional markets alike have slumped in the wake of today’s FOMC meeting report and Fed Chair Jerome Powell’s corresponding press conference.
The Federal Open Market Committee announced that while it would not be recommending a raise in interest rates immediately, it would stick with the tapering plan it publicized last December—effectively ending its asset purchases in by early March and raising interest rates.
Both Bitcoin and Ethereum ticked up in price in the minutes leading up to the 2:00 PM EST FOMC announcement, and then jumped more in the minutes after. Bitcoin jumped from just shy of $38,000 at 1:59 to nearly $38,750 at 2:09—Ethereum’s price action told a similar story.
However, the positivity was short lived, as both assets started to fall in the lead up to Fed Chairman Powell’s Q&A session set for 2:30 EST. At press time both coins had erased their gains for the day. Stocks followed a similar pattern: both the Nasdaq and Dow Jones Industrial Average took sharp dives after Powell spoke.
Chair Powell emphasized that the Congressionally-mandated monetary goals for the Fed were full employment and price stability. He stressed that its primary way of achieving those goals was to modulate interest rates. The question of how much rates will rise (0.25% seems expected), though, seems to have spooked investors.
Disclosure: At the time of writing, the author of this piece owned BTC, ETH, and several other cryptocurrencies.
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