Bitcoin (BTC) stayed mostly steady at $39,000 on May 4 as the U.S. Federal Reserve conformed to expectations of a 0.5% key interest rate hike.
Bitcoin eerily calm on Fed statement
Data from Cryptox Markets Pro and TradingViewย showed BTC/USD exhibiting minimal fluctuation as the Fed confirmed what many assumed had already been โpriced intoโ markets.
In contrast to previous remarks from the Federal Open Markets Committee (FOMC), the May 4 statement did not spark major volatility on crypto markets. The most that traders had to contend with was a brief spurt to just under $39,500.
At the time of writing, Bitcoin traded at similar levelsย throughout the day.
โWith appropriate firming in the stance of monetary policy, the Committee expects inflation to return to its 2% objective and the labor market to remain strong,โ the FOMC confirmed in an official statement.
โIn support of these goals, the Committee decided to raise the target range for the federal funds rate to 3/4 to 1 percent and anticipates that ongoing increases in the target range will be appropriate. In addition, the Committee decided to begin reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities on June 1, as described in the Plans for Reducing the Size of the Federal Reserveโs Balance Sheet that were issued in conjunction with this statement.โ
The scope for volatility to enter remained, however, as Fed chair Jerome Powell had yet to speak an hour after the statementโs release.ย
In anticipation of Powellโs comments, on-chain analytics resource Material Indicators argued that it still did not pay to be long BTC on shorter timeframes.
Giving the #BTC trend the benefit of all doubts here, but note that prior bull reversals had higher bid volume and depth then we have now. If you are long, you either need a looooong term view or a tight stop. Powell speaks in 30 mins. #MayThe4thBeWithYou https://t.co/VzE3V2kA8Q pic.twitter.com/sp1kqDRBrz
โ Material Indicators (@MI_Algos) May 4, 2022
Stocks, with which crypto continues to exhibit considerable correlation, were in a buoyant mood amid an absence of surprise moves by the Fed.
The S&P 500 put in a modest bounce to trade up 0.4% at the time of writing, while the Nasdaq 100 gained a more modest 0.2%.
โFED raising rates with 0.50%, but also starting the Quantitive Tightening from June 1st. Everything as expected, QT starts a bit later. The actual event was priced in already,โ Cryptox contributor Michaรซl van de Poppe addedย in part of Twitter comments.
โTighten until something breaksโ
Others were less comfortable with the Fedโs path.
Related:ย Bitcoin nervously awaits Fed as Paul Tudor Jones says โclearly donโt ownโ stocks, bonds
Analyzing the implications of the priced-in hike, economist Lyn Alden hinted that risks tended toward a new crisis-like moment when hikes would bring serious risks of their own.
All of this is subject to adjustment based on economic and financial conditions.
Tighten until something breaks, basically.
โ Lyn Alden (@LynAldenContact) May 4, 2022
On the topic of inflation, meanwhile, Alden added that the world had the โbiggest disconnectโ in inflation levels versus central bank key rates since the time of World War Two.
The outlook for Bitcoin, as Cryptox reported, remains skewed to the downside before a recovery later on as stocks suffer from Fed tightening.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cryptox.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
