Immediately after the Fed meeting, stock markets showed a slight increase in the range of 0.1% -0.25%. The cryptocurrency market also grew, but this did not last long. The bears regained control over the market, bitcoin continued to decline, and altcoins also went down following it.
At the last meeting this year, the Fed reaffirmed its previously announced intention to accelerate the rollback of the quantitative easing (QE) program. The Fed will now buy back twice as many bonds, which will result in the program ending in half the time, previously announced.
Previously, bonds for $15 billion were bought back monthly, now for $30 billion, of which $20 billion are treasury bonds, $10 billion are mortgage bonds. Until November, the Fed bought back $120 billion of bonds monthly. The QE program was launched in March 2020 at the height of the COVID-19 pandemic. The cryptocurrency market reacted very positively to it. From March 2020 to early November, bitcoin has grown almost 14 times, from $4970.
Previously, it was planned that the QE program would end in the second half of 2022. Now it can be completed in the second quarter of next year. Part of the program can be considered a reduction in the discount rate, which is now in the range of 0 – 0.25%. It has not been changed at the Fed meeting due to the fact that inflation in the United States breaks all records. At the end of November, inflation amounted to 6.8% – this is the maximum in almost 40 years.
High inflation does not allow the rate to be raised, this stops the strengthening of the dollar and is positive for the cryptocurrency market, which investors consider a safe haven and try to protect the wealth with crypto. Indeed, after the announcement of the Fed’s decision, the whales continued to buy BTC, and the scared hodlers readily sold them. It is reported by the consulting company deVere Group from Dubai. Nigel Green, founder, and CEO of deVere Group called the bitcoin sale panic. However, they did not lead to a collapse in the price of BTC, because the whales buy everything that the market offers.
However, cryptocurrency analysts are expecting a further decline in the price of BTC. Some forecasts also look panic. Popular trader, a veteran of the crypto market Tone Vays admits that bitcoin could drop to $20K. Using technical analysis, the expert states that this can happen if bitcoin breaks down the price of $47K. However, he personally believes that this is unlikely.
Meanwhile, another analyst Jesse Powell, CEO of the Kraken exchange, admits that bitcoin could drop to $40K. He does not consider this movement to be a confirmation of trend reversal but calls it a correction. In his opinion, at the level of about $40K, there is an excellent opportunity to buy bitcoin.