Steady Rates: Bitcoin Holds Ground at $34.5K Post Federal Reserve Announcement

Following the Federal Reserve's Federal Open Market Committee (FOMC) decision, market participants are now focused on gaining insight from Fed Chair Jerome Powell's post-meeting press conference regarding the future trajectory of U.S. central bank policy.

As widely expected, the FOMC chose to maintain the benchmark fed funds rate range at 5.25%-5.50%. The policy statement emphasized potential tightening of financial and credit conditions for households and businesses, which could exert downward pressure on economic activity, hiring, and inflation. The Committee acknowledged uncertainty regarding the extent of these effects, underscoring their vigilance towards inflation risks.

This acknowledgment of risks to economic growth mirrors language from the previous policy statement in September. It implies that incoming data will play a crucial role in determining whether there will be another pause or a rate hike at the December meeting.

In response to the news, Bitcoin (BTC) exhibited minimal movement, trading slightly above $34,500 according to CoinDesk data. While Bitcoin has historically shown significant intraday volatility during FOMC decision days, this impact seems to be waning as the Fed approaches the potential conclusion of its rate hike cycle, as suggested by crypto analytics firm K33 Research.

K33 analysts Anders Helseth and Vetle Lunde pointed out,

 "Fed interest rate decisions have seen reduced medium-term directional impact on BTC as correlations reign moderate."

 They further noted, 

"We still expect a significant intraday volatility contribution from the Wednesday FOMC, as the market typically reacts with bursts of strongly correlated and heightened volatility during the FOMC hours."

In recent weeks, various Fed speakers have hinted at a leaning towards one more rate hike before concluding what has been a historically significant rate hike cycle. The market will be closely monitoring Fed Chairman Jerome Powell's upcoming press conference for further clues on the future direction of U.S. central bank policy.