The Return of the Bitcoin Bull Run is Assured After the Fed Blinked

Bitcoin reacted immediately when the US Federal Reserve maintained the benchmark interest rate at 4.25%–4.5% on Wednesday. While largely expected, the halt came with a slightly changed prognosis, including a delayed interest rate cut schedule and changes to the pace of the central bank's balance sheet reduction.

FOMC Statement: The Fed's current “Dot Plot” shows only two interest rate cuts of 25 basis points for this year, fewer than many market participants had expected in December. Policymakers emphasized that although interest rates remain tight, economic variables such as inflation and employment determine when cuts will occur.

The monthly government bond runoff will decrease from $25 billion to $5 billion in April, a significant reduction that many experts believe could lead to a softer approach if economic or market conditions worsen.

Impact on Bitcoin

Bitcoin rose 4–5% after the Fed's statement, briefly touching USD 86,000. Nik Bhatia, creator of The Bitcoin Layer and author of Bitcoin Age, discussed the decision in his latest video. “Bitcoin rose 4% after the news that the Fed is slowing QT and is still committed to lowering interest rates,” Bhatia began his analysis, stating that the market has been focused on whether the central bank would change its quantitative tightening plans.

“The first step is to stabilize the balance sheet, allowing the Fed to quickly shift from $5 billion in QT per month to moderate expansion if necessary.

Bhatia noted that market risk appetite may increase due to the Fed's assistance for credit growth, which expands the global balance sheet and affects asset prices.

Head Crypto Analyst at Realvision Jamie Coutts agreed: “QT has effectively been dead (for some time) after last night.

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