The Crypto Basic - 1/27/2022 7:30:34 AM - GMT (+0 )
Since last week, the cryptocurrency market has reacted to FOMC policy decisions that will usher in a transition from the loose monetary policy that defined the coronavirus pandemic era to a more tactical fight against rising inflation.
After the first meeting of Federal reserves in 2022 on Wednesday, Fed agreed to raise U.S. interest rates in March. Fed also confirmed to end its bond purchases before launching a significant reduction in its asset holdings.
Such a move would help to divert away from the loose monetary policy toward a more pressing fight against inflation.
On top of the measures to combat rising inflation, the Federal Reserve plans to introduce three rate hikes this year and taper the Fed’s bond-buying program, which saw its balance sheet rise to $9 trillion during the coronavirus pandemic.
In a press conference, Fed Chair Jerome Powell said:
“Officials will discuss plans for reducing the central bank’s nearly $9 trillion balance sheet at their next two meetings, adding, expectations of “substantial” amount of shrinkage in the Fed’s bond holdings, which would reverse pandemic-era “quantitative easing that stabilized financial markets and the U.S. economy.”
Following indications from the Federal Open Market Committee (FOMC) of a likelihood to increase interbank interest rates in March in response to rising inflation, bitcoin, alongside the entire cryptocurrency market, ended a three-day winning streak.
The world’s largest cryptocurrency by market capitalization rose to a day high of $39,216 ahead of the meeting before a reversal that saw it slip to around $36,000.
Fortunately, bitcoin’s late rally through $36,800 saved the day as traders were fortunate not to see the cryptocurrency fall back to this month’s low of $32,937.
BTC suffered a major resistance around $39,200 before slumping 2.7% in the first hour when the FOMC statement was released. In reaction to the interest rate and press conference, the cryptocurrency fell 4.5% for the day.
Bitcoin subsequently fell to $35,596 today and is currently trading around $36,000, according to data on Coingecko, as the market appears to have stabilized.
Other cryptocurrencies in the top ten spots were not spared, with Solana (SOL) plummeting 7.4% for the day.
Yesterday Russian President Putin said Russia Has Competitive Advantages In Bitcoin Mining.
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