Bitcoin rallies to $68,000 after the Fed decides to keep interest rates on hold as expected

The Federal Reserve announced on March 20 that it would keep interest rates stable at 5.25% to 5.5% – in line with market expectations and easing concerns about more aggressive monetary tightening.

Additionally, the Federal Open Market Committee (FOMC) stuck to its forecast of a rate cut this year, signaling a cautious but optimistic outlook for the economy.

Fed Chair Jerome Powell's expected speech sent the crypto market rallying back to near annual highs after days of heavy hemorrhaging ahead of the FOMC meeting. The

According to CryptoSlate data, Bitcoin (BTC) was trading at $68,032 at press time – up 6.52% – after falling to a low of $60,800 earlier in the day.

The broader market also rebounded from local lows, with most tokens posting gains between 5% and 15%. Meanwhile, some tokens – including memecoin Pepe (PEPE) and Bitcoin Layer-2 Stacks (STX) – posted gains of over 20% as the day's biggest gainers.

The bullish momentum could take the market back to the previous week's highs much sooner than expected, despite the prevailing bearish sentiment in the previous days.

Interest rate cuts by June

The Fed's decision comes following higher-than-expected consumer price index (CPI) and producer price index (PPI) reports, which raised fears that inflation could gain momentum.

Such a scenario would have forced the central bank to maintain tight financing conditions, potentially delaying interest rate cuts and having a negative impact on asset prices.

During the March FOMC meeting, policymakers forecast interest rates would fall to 4.6% by the end of 2024, which was the same average level forecast in the December outlook. The confirmation allayed the fears of investors who had been fearful of a possible hawkish reversal in the Fed's strategy amid fluctuating economic indicators.

Before the recent FOMC announcement, market participants largely expected the first rate cut to occur in June, with the probability hovering around 60%. However, the odds have increased following the announcement as the market now assigns a 70% chance of at least one rate cut by June based on data from the CME FedWatch Tool.

Revised forecasts

In parallel with this interest rate decision, Fed policymakers have also revised their economic forecasts, notably raising the U.S. growth outlook for this year to 2.1 percent from a previous forecast of 1.4 percent in December. This upgrade underlines a more optimistic view of the economy's resilience and expansion potential.

However, the inflation outlook remains a complex challenge as the headline inflation forecast remains stable while the forecast for annual “core inflation”, which excludes volatile items such as energy and food prices, was raised slightly to 2.6 percent.

This decision follows the Fed's aggressive policy actions since March 2022, which saw the key interest rate raised by a total of 5.25 percentage points in response to rising price pressures. Since July 2023, the central bank has paused these hikes and adopted a vigilant stance as it navigates economic uncertainties.

Bitcoin market data

At press time 10:17 pm UTC on Mar. 20, 2024Bitcoin is ranked No. 1 by market capitalization, and the same goes for its price high 7.06% in the last 24 hours. Bitcoin has a market capitalization of $1.34 trillion with a 24-hour trading volume of $68.48 billion. Learn more about Bitcoin ›

Crypto Market Summary

At press time 10:17 pm UTC on Mar. 20, 2024the entire crypto market is valued at at $2.56 trillion with a 24-hour volume of $171.73 billion. Bitcoin dominance is currently at 52.28%. Learn more about the crypto market ›

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