Bitcoin Spikes to Intraday High as Fed Leaves Rates Unchanged

The price of Bitcoin, the top cryptocurrency, spiked to an intraday high of $38,820 on the Bitstamp exchange after the U.S. Federal Reserve announced Wednesday that it had left the overnight interest rate unchanged. 

In its postmeeting statement, the Fed has indicated that it could raise rates in mid-March, but there is no concrete timeline for now.

The central bank was widely expected to signal that it would start hiking interest rates.

The Fed’s hawkish shift has been seen as the biggest headwind for cryptocurrencies and equities.

Earlier this week, Bitcoin plunged below $33,000 during a sell-off that analysts believe was caused by the unfavorable macro environment. Analysts believe that crypto and other assets were able able to benefit from the ultra-easy monetary policy conducted by the central bank to cushion the blow delivered by the pandemic.

In March 2020, the Federal Reserve slashed the benchmark short-term rate to a range of 0%-0.25%.

The central bank is also expected to phase out its unprecedented bond-buying program this March. It has now been reduced to just $30 billion a week.

Fed Chairman Jerome Powell expects Omicron cases to “drop off rapidly,” but he adds that the virus continues to cause “great hardship.”

Inflation remains “way above” the central bank’s goal of 2%, according to Powell: 

We understand that high inflation imposes significant hardships.

When it comes to the rate policy, Powell says that no decision has been made so far, adding that Fed officials will be “guided by incoming data.”    

The Fed head says that there’s “quite a bit of room” to move rates up without undermining the labor market.