Bitcoin Bounces Back After Fed’s Hawkish Statement, Maintaining Some Upside Momentum

Bitcoin experienced an initial dip after the Federal Reserve’s latest policy announcement, but quickly regained ground as the day progressed.

As widely expected, the U.S. Federal Reserve held its benchmark fed funds rate steady at 4.25%-4.50%, marking the first pause in rate hikes since the central bank started easing policy in September of the previous year.

In its accompanying statement, the Fed acknowledged that unemployment had remained at a “low level,” while inflation was still “somewhat elevated.” The tone was more hawkish than before, notably omitting the earlier reference to “progress” in bringing inflation down to its 2% target, signaling caution moving forward.

Bitcoin (BTC), initially pressured by the announcement, dropped to $101,800, while broader U.S. equities also slid—Nasdaq falling 1.1% and the S&P 500 down 0.9%. The dollar and gold remained relatively unchanged, with the 10-year Treasury yield climbing 5 basis points to 4.59%.

Since the Fed’s initial rate cut in September, the central bank has lowered rates by 100 basis points, while the U.S. 10-year Treasury yield has experienced a sharp rise, now standing at 4.6% compared to 3.6%. This divergence between short-term and long-term rates is unusual and has caught the attention of investors and analysts alike.

Fed Chair Jerome Powell had made it clear following December’s meeting that no further rate cuts were expected in the near term. At his post-meeting press conference, Powell explained that the shift in the Fed’s language regarding inflation wasn’t intended to convey a specific policy direction. Bitcoin and equities both recovered from earlier losses after Powell’s comments, with Bitcoin climbing back above $103,000 by the conclusion of the press conference.