The Federal Reserve of the United States announced that it will maintain interest rates at a high level of 5.25% to 5.5%, but believes that the risks to achieving employment and inflation goals are trending towards a better balance. U.S. stocks soared, with the S&P 500 index reaching a historical high of 5,200 points and the Dow Jones also closing at a new high. Bitcoin and Ether experienced a sell-off yesterday due to news of ETF outflows and difficulties in passing the Ether futures ETF, but they also rebounded in the evening with overall market sentiment.
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FED maintains interest rates, expects three rate cuts this year
Bitcoin and Ether experienced a sell-off and rebound yesterday
Federal Reserve Statement
It stated that recent indicators indicate that economic activity has been steadily expanding. Employment growth remains strong, and the unemployment rate remains at a low level. Inflation has slowed down over the past year but remains high. The committee judges that the risks to achieving employment and inflation goals are trending towards a better balance.
According to CNBC’s report, Chairman Powell stated in a press conference after the meeting that although inflation data increased in January and February, it did not change the overall downward trend, but only proved that inflation follows a non-linear path.
I believe they haven’t really changed the overall situation, which is gradually declining to 2% on the bumpy road of inflation. We will not overreact to the data of these two months, nor will we ignore them.
Powell reiterated that if the economy continues to grow, policymakers still intend to cut interest rates by the end of this year and expressed confidence in the Fed’s 2% inflation target.
The rate dot plot released this time still shows the probability of three rate cuts this year, which also boosts investors’ confidence in a rate cut in June. According to CME FedWatch data, investors believe that the probability of a rate cut in June is over 70% (up from 50% two weeks ago).
Bitcoin briefly dropped to $60,775 yesterday due to the continuous outflow of Bitcoin spot ETFs, but it gradually rebounded above $67,000 in the evening with the boost of market optimism.
(Ethereum ETF outflows for two consecutive days, BTC falls below $61,000, the largest single-day decline since the FTX incident)
Ether also briefly declined to $3,056 yesterday, a 20% weekly drop. Chain News analyzed yesterday that this may be due to the decreased probability of passing the Ether spot ETF and the gradual decline of the repledging frenzy. Fortune also revealed last night that the U.S. Securities and Exchange Commission (SEC) is conducting an in-depth investigation into Ethereum and speculates that this is not just a routine inspection. The SEC may want to classify Ether as a security, which could have a huge impact on the dream of launching an Ether ETF.
However, ETH is still influenced by overall market sentiment and has returned to around $3,500.
(Ethereum’s 20% weekly drop: Reason? Difficulty in passing the Ether spot ETF, fading repledging frenzy)
(Fortune: Ethereum under close scrutiny by the SEC, attempting to classify ETH as a security)
ETH
FED
Rate Cut
Powell
Further Reading
FED Central Bank Digital Currency (CBDC) Research: Will it Affect the Status of the US Dollar? What Kind of CBDC Will Succeed?
“Pass the Stablecoin Act Quickly!” Federal Reserve Chairman Powell Urges Swift Regulation of Stablecoins, Requests Congress to Speed Up