BTC Hits $49K after FOMC Announcement

The Bitcoin (BTC) price jumped over US$2,000 on Dec 15, 2021, after the US Fed decided to increase the interest rate and curtail the program to buy bonds. 

The price of Bitcoin (BTC) has jumped over US$2,000 late on Dec 15, 2021, after the United States Federal Reserve decides to increase the interest rate and curtail the program to buy bonds (starting in 2022). Fed Chairman Jerome Powell has said that “Stablecoins can certainly be a useful, efficient consumer-serving part of the financial system if they’re properly regulated.” Powell also made it clear that he doesn’t consider cryptocurrencies to adversely affect the financial stability of the US market. 

The Federal Open Market Committee (FOMC), the committee that decides on managing the monetary policy, has decided to prioritize its fight against inflation. Accordingly, the committee has said in its policy statement that they want to rapidly end their monthly bond-buying program. The Fed was buying bonds every month throughout the pandemic for chugging money through markets and bolstering growth. 

Economic projections released on Wednesday said showed that the US Fed is likely to increase the near-zero interest rate by 3-fold in 2022. The new economic projections of the Federal Reserve suggest that by 2024-end, the interest rate could rise to 2.1% since it has been rock bottoming to near-zero levels. Reports suggest that the monthly bond-buying program is likely to end by March 2022. 

While commenting on stablecoins and their regulations, Fed chair Jeremy Powell has said:

“Right now, they aren’t. They have the potential to scale, particularly if they were to be associated with one of the very large tech networks that exist… You could have a payment network that was immediately systemically important that didn’t have appropriate regulation and protections. The public relies on the government and the Fed in particular to make sure that the payment system is safe and reliable.”

Following these cues, BTC/USD pair and other altcoins jumped by almost 5%. Bitcoin price has increased to US$49,000 since the announcements. In fact, the second-largest cryptocurrency, Ethereum (ETH) has again reclaimed the US$4,000 level. Solana (SOL) is again making an explosive rally. In the last 24-hours, SOL price increased by 14% at one point in time.