Bitcoin Jumps 5% to Almost $50,000 as Traders Welcome Fed Event

16 Dec 2021 · 3rd Party Analysis

Bitcoin Jumps 5% to Almost $50,000 as Traders Welcome Fed Event


In Summary:

  • Bitcoin price rallies to almost $50,000 after traders cheer Federal Reserve announcement
  • Ether tops $4,000 as the wider cryptocurrency market pushes to higher grounds

What’s Trading in the Markets?

The price of bitcoin advanced over 5% to reach levels near $50,000 on Wednesday when traders welcomed the Fed’s final meeting of 2021. More precisely, Federal Reserve Chairman Jerome Powell appeared for a press conference to conclude a two-day policy meeting.

His words benefitted the crypto market, as well as the wider financial markets, including stocks and gold. Cryptocurrencies, in particular, rose as Chair Powell presented an optimistic outlook for the economy.

While the original cryptocurrency advanced somewhat moderately, Ether, the second-biggest coin, rallied more than 12% from its Wednesday lows. In more detail, the Ethereum token jumped from a low of $3,600 to a session high of $4,089 per coin.

Broadly, the entire cryptocurrency market advanced to a total valuation above $2.25 trillion. Of it, bitcoin holds roughly $925 billion, or 41%, with a price per coin near $49,500.

Dive Deeper in the Financial World

The upside swing in cryptocurrency was fueled by positive remarks from Chairman Powell. He addressed current inflation pressures and tight labor market and he said the Fed has tools to tackle them. On that note, Mr. Powell commented Fed officials see at least three interest rate increases in 2022.

Further, the pace of stimulus withdrawal doubles to $30 billion from $15 billion. It’s important to highlight the US central bank injected as much as $120 billion per month in the US economy since March 2020. As a result, the extraordinary stimulus has fueled stocks and cryptos to record highs.

To this end, the three major indexes in the US reversed losses yesterday and turned higher by 1% or more. For example, the 30-stock Dow Jones advanced 1.1% on the day as real-economy stocks gained across the board.

In addition, the blue-chip S&P500 added 1.6%, while the tech-heavy Nasdaq Composite rallied 2.1%. Technology stocks, in particular, were among the biggest winners following the press conference by the Fed Chair.

What to Expect in the Markets? (EST time)

In that context, central bank decisions continue with full steam ahead. Today, the Bank of England will deliver its interest rate decision at 07:00 am. With this in mind, the UK economy registered its fastest annual inflation rate increase in more than a decade.

Consumer prices in the UK rose 5.1% in November compared with a year ago. The inflation print was higher than the 4.9% expected by economists. Weighing further on the UK outlook, the country hit a record 78,610 coronavirus cases on Wednesday, the highest daily number since the pandemic began.

Against this backdrop, the Bank of England might offer surprising announcements that could increase the volatility in the British pound. In turn, this could open trading opportunities for market participants.

Still today, at 07:45 am, the European Central Bank will release its interest rate decision. Later, at 08:30 am, President Christine Lagarde will hold a press conference. Also at 08:30 am, the US reports initial jobless claims.

In the evening, the Bank of Japan posts its monetary policy statement in a press conference scheduled for 09:30 pm.

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