Bitcoin ($BTC) hit a new 2023 high of $35,912 on Wednesday, following the Federal Open Market Committee (FOMC) meeting. The price increase was likely due to a combination of factors, including the decision to pause interest rates and the continued growth of the cryptocurrency market.
With rates on pause, there could be higher asset prices coming. Inflation may also return, and punish anyone holding fiat assets.
Hawkish Pause?
According to the latest updates, the U.S. Federal Reverse (Fed) has paused interest rate hikes, maintaining the rate at 5.25% to 5.50%. The Fed also left the rate unchanged at the September 2023 FOMC meeting.
Jerome Powell, the Fed Chair, emphasized that the agency doesn’t rule out raising interest rates in the coming meetings. He also said that the Fed is committed to its long-term goal of controlling inflation and that it has no current plan to cut rates in the future.
The pause came as expected after Powell hinted that interest rate hikes may start slowing soon during a speech at the Economic Club of New York on Oct. 19.
The Fed Chair said recent data showed progress toward maximizing employment and stabilizing prices, but noted that inflation remains high and the Fed is prepared to raise rates further as needed to achieve its 2% target.
The Fed is in a Jam
The final FOMC meeting this year will take place on December 12-13. Goldman Sachs Asset Management expects the Fed to continuously hold interest rates until 2024.
After the meeting, the price of Bitcoin surpassed $35,900, its highest level of the year so far. At press time, Bitcoin is trading at around $35,200, up 112.28% in 2023.
Michael Saylor, founder of MicroStrategy, just confirmed that the company purchased an additional 155 BTC in November, totaling its holding to 158,400 BTC. It is estimated that the firm has profited approximately $700 million.
Altcoins have also seen an uptick over the past 24 hours. Ethereum (ETH) surged 2%, Binance Coin (BNB) surged 1.66%, Ripple (XRP) was up 4%, Cardano (ADA) rallied 6.64%, and Solana (SOL) surged 10.28%, making it the gainer of the day.
Market Outlook in November and Beyond
The Fed’s decision also kicked off a positive November, but the market outlook in November is still unpredictable and complex. Historical data shows mixed results for Bitcoin’s November performance over the past five years. Accordingly, Bitcoin only gained in November 2020. The cryptocurrency closed the month with a red candle in the remaining four years.
The Consumer Price Index (CPI) for October, slated for a release on Nov. 14, will be the next major macro data to look out for. The index will provide more insight into the current state of inflation and the Fed’s monetary policy outlook.
If the CPI comes in lower than expected, it could signal to the Fed that inflation is moderated and that it may be able to slow down the pace of interest rate hikes. This could have a positive impact on the crypto market.
The expectation that a spot Bitcoin exchange-traded (ETF) will be approved in the next few months could boost price momentum. Multiple major institutions, including BlackRock, Invesco, VanEck, Bitwise, Fidelity, ARK Invest, and 21Shares, are waiting for the decision of the U.S. Securities and Exchange Commission (SEC) on their applications to launch the spot bitcoin product.
The SEC has so far approved Bitcoin and Ether futures ETFs but has rejected spot Bitcoin ETFs due to concerns about fraud and market manipulation. Analysts believe that applications for spot Bitcoin ETFs from large and established players could pressure the SEC to change its stance.
In addition to the ETFs, the ongoing Israel-Hamas and the Bitcoin Halving set to come in Q4 2023 could also trigger a bull run in the future.
