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Bitcoin Surges to $104K as Fed Holds Rates, Sparking Crypto Frenzy

Coin WorldWednesday, Jan 29, 2025 6:02 pm ET

1min read

Bitcoin's price surged to $104,782 following the Federal Reserve's (Fed) decision to maintain interest rates, marking a significant reaction from futures traders. The Fed's wait-and-see approach to inflation concerns sparked substantial activity in the cryptocurrency markets, with approximately $15 million in short positions liquidated within an hour.

The Fed's decision to keep interest rates unchanged at 4.25% to 4.5% was perceived positively by the market, with economist and crypto enthusiast Alex Krüger describing the FOMC meeting and subsequent comments from Jerome Powell as "good." Bitcoin prices surged, prompting explosive activity in futures trading and significant short liquidations.

The immediate aftermath saw a price movement that initially trended downwards, paralleling declines in traditional markets such as the S&P 500 and Dow Jones, before rebounding to an intra-day high around $104,782. However, analysts are cautious about the sustainability of this upward move, emphasizing the need for a lasting increase in spot purchases and a strong market foundation comprised of both margin longs and increased volume in spot trading for Bitcoin to stabilize above $105,000.

Jerome Powell's statements during the post-FOMC press conference reveal a nuanced take on the U.S. economy, acknowledging that inflation remains "somewhat elevated" while leaving markets to speculate about future economic parameters. Popular crypto trader Alex Krüger noted the Fed's communication strategy as "good," while Pear Protocol founder HUF described the FOMC conference as "a bit of a nothing burger," criticizing the lack of a definitive stance from Powell.

With Bitcoin's recent fluctuations tied closely to overarching economic indicators, investors are advised to stay updated on the Fed's forthcoming decisions and statements. As traditional financial markets react to these economic signals, it increasingly becomes clear that Bitcoin is intertwined with broader market sentiments. For traders, maintaining flexibility in strategy—pivoting between spot and futures trading—might present opportunities as newer economic data roll out.

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