Bitcoin rises 0.7% to $81,245 after Fed holds rates in 10–2 vote
Key Facts
The Federal Reserve kept its target interest rate range at 3.75% to 4% on October 28, but the decision was approved by a 10–2 vote, marking a notable split within the committee. Bitcoin rose 0.7% to $81,245 after rebounding from around $80,500 during morning U.S. trading, according to a Dow Jones report. The cryptocurrency’s move followed the hold decision, while market bets on the December meeting remained in play. Lisa Cook and Beth Hammack voted against keeping the range unchanged, favoring a quarter-percentage-point increase. The vote highlights that the hold decision was not unanimous and that some policymakers saw a case for further tightening.
The Fed said in its statement that economic activity was “expanding at a solid pace” and inflation “remains elevated.” It added that the accumulation of more information would help the committee determine the appropriate stance of policy to ensure inflation returns to its 2% goal in a timely manner. The statement places elevated inflation at the center of the committee’s assessment, despite its decision to leave rates unchanged at that meeting. September data released later showed the extent of price pressures: the personal consumption expenditures price index rose 0.5% from the previous month and 3.6% year over year. The core index, which excludes food and energy, increased 0.3% monthly and 3.1% annually, according to the U.S. Bureau of Economic Analysis.
The annual inflation reading for the personal consumption expenditures price index was higher than the 3.4% recorded in August, while September’s monthly increase of 0.5% was in line with economists’ expectations, according to Reuters. This shows that prices continued to rise year over year alongside an acceleration in the monthly reading compared with August’s 0.3% increase. Meanwhile, the economy recorded stronger growth in the third quarter, with real gross domestic product rising at an annual rate of 3.4%, versus 2.2% in the second quarter, according to the Bureau of Economic Analysis’ advance estimate. Investment, consumer spending and government spending contributed to the increase, partly offset by a decline in exports. These indicators provide economic context for the Fed’s decision and market pricing of the rate path, without determining its direction on their own.
Markets were pricing in a probability of about 83% for a quarter-percentage-point rate hike when the committee meets in December, according to CME Group data cited by Dow Jones on October 28. An Exness analyst said rate expectations supported the dollar and provided a floor for Treasury yields, creating a less favorable backdrop for Bitcoin. He added that renewed optimism related to artificial intelligence had not yet translated into tangible demand for the cryptocurrency. In another part of the technical assessment cited in the report, David Morrison of Trade Nation said the chart’s overall structure appeared constructive from a bullish perspective, but warned of a possible retest of the $75,000 level if a downside break occurred. “There is a risk of a break that could push it to retest $75,000 in the first instance,” he said.
The following day, Bitcoin fell 1.5% to $80,157 in an intraday reading cited in a Dow Jones report published on October 29, after dropping below $80,000 earlier in the session. This price is not a daily close; EL7 data recorded a close of $81,343.5 on October 28, followed by $81,750 on October 29. These readings reflect the difference in timing between the report’s intraday price and EL7’s recorded daily close. Markets are now awaiting the minutes of the Fed meeting held on October 27 and 28, scheduled for release on November 18. The next release of the personal income and outlays report, which includes the personal consumption expenditures price index for October, is due on November 25, ahead of the committee’s next meeting on December 8 and 9.