- Bitcoin surpasses $85,000 after Fed scales back quantitative tightening.
- Ethereum and XRP also see price increases.
- Market expects possible Fed rate cuts in 2025.
Bitcoin reached a price above $85,000 following the Federal Reserve’s announcement on March 19, indicating a potential easing of monetary policy.
The Fed’s decision to start reducing its quantitative tightening approach has prompted speculation about future rate cuts, bolstering the crypto market.
Fed Signals Policy Shift; Bitcoin Exceeds $85,000
The Federal Reserve’s decision to reduce its quantitative tightening strategy starting in April has ignited speculations about future rate cuts. The decision was accompanied by cautious economic forecasts, with GDP growth projections for 2025 revised down to 1.7% and inflation expectations increased to 2.8%. Bitcoin’s surge above $85,000 reflects the market’s positive reception of the Fed’s announcement.
A reduced monthly Treasury bond runoff from $25 billion to $5 billion is also significant in the Fed’s policy shift (Federal Reserve New Release). The crypto market responded with notable price jumps; Ethereum rose by 0.8% to $2,043, while XRP surged 12% after the SEC dismissed an appeal against Ripple. According to James Butterfill, a hawkish Fed stance may limit short-term crypto recovery prospects.
Everybody agrees that the fight against inflation has stalled. If [the Fed] was really serious about a 2% inflation target, the market would be speculating about when is the next hike, not when is the next cut.
— Mohamed El-Erian, Economist
Market reactions include a pronounced return to bullish sentiment, as indicated by the normalization of options market positioning.
Crypto Market Gains: Analysis of Current Trends
Did You Know? The last time Bitcoin experienced a similar sharp increase was in December 2021, following another significant Fed policy announcement.
Bitcoin is currently trading at $85,623.00, maintaining its position above the $85,000 resistance level. The Relative Strength Index (RSI) sits at 58%, indicating that the market remains relatively neutral. Historical patterns suggest that Bitcoin’s movement correlates with major Fed decisions (Federal Reserve New Release).
Economists suggest that the Fed’s policy stance may drive the next crypto market trend, either sustaining current gains or introducing volatility. If the Fed continues with this cautious approach, the market may see a more prolonged positive trend.
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