After an early morning break-in as The crypto market waited expectantly for the Fed meeting, Bitcoin Prices (BTC) rose more than 7% from an intraday low of $ 54,000 to $ 58,000. The broader crypto market welcomed the words of Fed Chairman Jerome Powell as he reintroduced that interest rates would stay at current levels through 2023. In addition to BTC, Ethereum (ETH) and other altcoins rallied to reduce past weekend’s losses.
Federal Reserve Maintains Interest Rates Near Zero; What that means for Bitcoin
As expected, the Federal Open Market Committee (FOMC) voted to keep interest rates low while continuing to repo bond purchases of at least $ 120 billion a month. At the meeting, the committee also expected core inflation to rise and forecast a long-term inflation rate of 2%. The economic recovery from the pandemic and the expansion of the money supply are two main factors that will affect inflationary forces in the near future.
After the FOMC meeting, the US dollar fell as government bond yields fell. This is positive news for Bitcoin as investors and institutions will turn to the digital asset as a hedge against inflation and the dollar. With the Federal Reserve choosing not to apply contractive monetary policy by raising interest rates, the dollar is likely to continue to lose ground. Companies like MicroStrategy, Square, and Tesla have turned to Bitcoin in anticipation of rising inflation on their balance sheets. It is likely that more companies will participate.
Resetting funding rates: has it bottomed out?
In other news, perpetual futures financing rates for Bitcoin fell from 0.068% on Monday with a “full reset” to 0.001% and have since increased slightly to 0.02%.
The funding rates are unique to perpetual futures contracts and are set by the market. They vary according to long and short demand. In the past, financing rates tended to correlate with market sentiment. When the market is bullish or bearish, funding rates tend to be positive or negative, respectively.
A low positive funding rate usually suggests the bottom is near, and Bitcoin could very well be due to a rebound from recent highs. However, if funding rates continue to decline and break into negative territory, sentiment may turn bearish.
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