SEC Dovish Speech: What is the Impact of Loose Monetary Policy on the Crypto Market?
The overall crypto market turned from a decline to an increase early today, reversing yesterday’s decline. Investors have temporarily stopped selling and are considering the latest monetary policy decision from the Federal Reserve. As of the publication, the price of Bitcoin has risen by nearly 10% within the day, and Gate.io is currently quoting $67,138. Yesterday evening, Bitcoin briefly fell below $61,000.
At the end of the two-day policy meeting of the Federal Reserve, the Fed delivered a dovish speech at the meeting. Powell said he believes interest rates may be at a cyclical peak, suggesting that three rate cuts this year are still possible. At the same time, he reiterated that the Federal Reserve will slow down its pace of balance sheet tightening and stated that this will happen soon, and he does not want the problem of reserve shortages to repeat itself. Powell said that most officials still believe it is possible to achieve confidence in inflation, but he also acknowledged that the US economic data from January to February did not boost the Federal Reserve’s confidence in the progress of US inflation. The labor market remains relatively tight, but supply and demand conditions continue to trend towards a better balance.
Chart source: Federal Reserve
On the balance sheet side, Powell stated that since the start of the contraction, Federal Reserve securities have decreased by nearly $1.5 trillion. “At this meeting, we discussed issues related to slowing down the rate of decline in securities holdings. Although we did not make any decision on this today, the committee generally believes that reducing QT will happen soon, which is consistent with our previously announced plan.”
After the Bitcoin spot ETF was approved, BTC gradually entered the mainstream financial market. Like technology stocks, Bitcoin will also benefit from low interest rates and improved market liquidity, which will improve investor sentiment and increase investment in growth assets.
According to Gate.io data, after reaching a historic high of $73,769 last Thursday, Bitcoin has fallen by 10% in the past week, but BTC has still risen by 53% so far this year.
Ethereum rose 12% to $3520 within the day and briefly exceeded $4,000 last week. Solana rose 13% and returned to $190, leading the overall rise of Solana ecological tokens. The DOGE and FLOKI of the Meme sector rose 20% and 40% respectively, and Meme coins generally performed well.
Chart: Today’s Trend of FLOKI
Stocks related to cryptocurrencies performed better throughout the day. Coinbase stocks rose 11%, while MicroStrategy rose 9% after a sharp drop of about 20% earlier this week. In the crypto mining sector, Iris Energy and CleanSpark rose 26% and 22% respectively. Marathon Digital rose 16%, Riot Platforms rose 11%.
After the Federal Reserve meeting, the Dow Jones Industrial Average, Standard&Poor’s 500 Index, and Nasdaq Composite Index all closed at record high levels.
