Don’t fight the Fed: FOMC meeting is Bitcoin’s most volatile ever
The FOMC meeting is done and dusted, but its impact on the price of bitcoin has left a lasting market impression. Where the market had expected volatility after such an important meeting for the financial market, it was steeper than expected. Looking back, it has been some of the most volatile the market has been and a new record for the FOMC meeting.
Most volatile FOMC for Bitcoin
Just before the FOMC meeting began last week, there was already some volatility in the market. However, it would quickly pick up once the meeting was in full swing and the results of the meeting were made public.
When the statement was released that the Federal Reserve (Fed) increased interest rates by another 75 basis points (bps), bitcoin had dumped hard in the market. Within one minute, the price had fallen more than 5%, then rebounded by 2.7% in the minute that followed. Even with this recovery, volatility did not abate. The price will continue to fluctuate wildly during the one hour following the announcement.
FOMC triggers massive volatility | Source: Arcane Research
By the time the one hour after the announcement was over, volatility levels had reached 0.8%. This is arguably the most volatile of all FOMC meetings in the history of bitcoin, and that comes as no surprise given the inflationary trend of recent months.
The Fed is still expected to raise interest rates even after this. This is because it has reiterated that it plans to get the economy back to a 2% inflation rate, and since it is still far from that goal, more volatility is expected for bitcoin.
The aftermath
For the most part, in the days following the FOMC meeting, the price of bitcoin had returned to largely normal. The only difference, in this case, was the fact that there was more bearish sentiment in the market. This bearish sentiment has led to a decline in the price of the cryptocurrency.
BTC goes back into the green | Source: BTCUSD on TradingView.com
Before the FOMC meeting had taken place, bitcoin prices had been trending just below $20,000. However, the price has fallen below $19,000 several times since then. However, the price had recovered, above $19,000 as of this writing.
The cryptocurrency also continues to trade in a highly correlated state to the macro markets. This has meant that most of the activity in the stock market has been mirrored by bitcoin in the last couple of months. This high correlation is also expected to continue for the foreseeable future.
Featured image from Coingape, charts from Arcane Research and TradingView.com
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