The (Small) Impact of The Fed’s Rate Decision on BTC

TL;DR

• The Fed just announced that they weren’t touching interest rates in the US for now, leaving them unchanged at 5.25%-5.50%, which resulted in a small drop in value for BTC, but the impact was small.

Full Story

There ya have it: the Fed just announced that they weren’t touching interest rates in the US for now, leaving them unchanged at 5.25%-5.50%.

(Which means people won’t have more money in their pockets to spend on risky-ish assets like crypto).

The decision to hold interest rates was widely expected by analysts!

What wasn’t widely expected, though, was that the Fed Chair, Jerome Powell, gave little-to-no indication that a September rate cut is happening.

(Something he probably would have done if this decision was teetering on the edge of a ‘yes, we’ll make he cut now’).

As a result, the crypto markets dipped slightly (with BTC ~2% down at the time of writing, compared to before the Fed rate decision announcement).

But here’s the good news:

In the past, when interest rates rose or stayed the same (i.e. anything besides an interest rate cut), the crypto markets dropped significantly.

Less volatility related to the news cycle shows a maturing asset class.

(We love to see it).

And in other good news, earlier this week, Jerome Powell did say, and we quote - “inflation has eased substantially” - which sparked a small uptick in the value of BTC.

Whether they hold rates steady in September, or make their first cut since March 2020, is anyone’s guess at this point.

A lot can happen in just a couple of months!