“July FOMC summary: Overall very vanilla event,” tweeted @tedtalksmacro.
The Federal Reserve (Fed) decision to raise the Federal Funds Rate (FFR) by 25 basis points to 5.50%, the highest level since February 2021, had little impact on the cryptocurrency and Bitcoin (BTC) market, with the event described as “very vanilla” by journalist Ted Talks Macro.
The FOMC indicated that its 2% inflation target is still a long way to go and that it will take a data-driven approach to future rate hikes.
Although some investors expected a more aggressive tone from the Federal Reserve, the central bank’s caution was seen as a sign that it remains concerned about the possible impact of its monetary policy on the broader economy.
According to Ted Talks Macro, the full effect of the tightening has not yet been felt, and a return to inflation targeting may require below-trend growth and a weakening labor market. Despite the Fed’s rate hike decision, it may raise rates again in September, depending on the data.
The Fed’s decision to leave quantitative tightening (QT) unchanged was also a sign that the central bank is taking a restrained approach to monetary policy.
Markets reacted positively to the Fed’s decision, with both Bitcoin and US equities rising. Many investors took the event as a sign that the Fed is getting closer to hitting the pause button on rate hikes, which could be positive for risk assets in the short term.
“Moderate” Growth
Major measures of inflation remain more than double the Fed’s target, and the economy, by many measures, including a low unemployment rate of 3.6%, continues to beat expectations despite rapidly rising interest rates.
Job growth remains “robust,” the Federal Reserve said, describing the economy as growing at a “moderate” pace, a slight improvement from the “modest” pace seen at the June meeting. According to economists polled by Reuters, the US government is expected to report on Thursday that the economy grew at an annual rate of 1.8% in the second quarter.
Fed’s Chairman Jerome Powell said he was still hopeful the economy could achieve a “soft landing,” a scenario in which inflation falls, unemployment remains relatively low and a recession is avoided.
Bitcoin Bulls Jump Higher as Sell Wall Disappears
After the Federal Open Market Committee (FOMC) announced a 0.25% interest rate hike, cryptocurrency market, and data analysis firm Material Indicators suggested that a wall of selling at the $29,400 level has faded. This level is just above the current price of Bitcoin, which currently sits at $29,300.
According to Material Indicators Firechart, a significant level has been cleared for Bitcoin, allowing the cryptocurrency to break out of this zone and recover to higher price levels. In the short term, however, Bitcoin’s 50-day MA may present a roadblock as it is currently sitting above the current price of the cryptocurrency.
Despite this challenge, there is good news for Bitcoin bulls, as the cryptocurrency’s Average Directional Index (ADX) has seen a significant drop and is approaching the neutral level.
The drop in the ADX is usually followed by a strong uptrend, which could push Bitcoin back above the $30,000 mark. Furthermore, Bitcoin could trade above its 50-day MA and recapture it as a support level, as it has been doing for the past month before its 5% drop last week.
These technical indicators suggest that Bitcoin may be poised for a bounce shortly, which could be good news for investors and traders alike.
By Audy Castaneda
