Bitcoin update: US Fed leaves rates unchanged, CME to attract investors with options on BTC Friday futures
- The Federal Reserve left rates unchanged at 4.25% - 4.50%, halting its pivot.
- Bitcoin and the crypto market could react negatively if the Fed hold rates steady in the coming months.
- The CME announced its intention to launch options on Bitcoin Friday futures, subject to a regulatory review.
Bitcoin (BTC) is up 3% on Wednesday following the Federal Reserve's (Fed) decision to leave interest rates unchanged at 4.25% - 4.50%, in line with expectations. Additionally, the Chicago Mercantile Exchange Group (CME) announced that it plans to launch options on its Bitcoin Friday futures on February 24.
Bitcoin rises 3% as Fed holds rates steady, CME looks to launch options on Bitcoin Friday futures
Bitcoin and the crypto market witnessed slight gains following the Federal Open Market Committee (FOMC) meeting on Wednesday. The Fed confirmed that it would maintain its Federal Funds Target Range (FFTR) at 4.25% - 4.50%, in line with market expectations.
"In support of its goals, the Committee decided to maintain the target range for the federal funds rate at 4.25% to 4.5%," the central bank said in a statement.
The move follows a 25 basis point rate cut in December, as the central bank under President Donald Trump seeks to strike a balance between economic expansion and keeping inflation in check.
The committee also hinted at an uncertainty of future rate cuts due to ongoing policy changes in the US.
The decision to halt rate cuts by the Federal Reserve may signal a bearish outlook for the crypto market in the long term.
Despite the initial struggle, Bitcoin and the entire crypto market have shown resilience, recovering since the announcement to see a 3% gain at press time.
Bitcoin's rise could be fueled by positive investor activity following the CME Group's attempt to provide options on Bitcoin Friday futures from February 24. Although subject to regulatory review, the contracts will mark the exchange's first fully financially settled crypto options.
The CME Group aims to help customers hedge against the risks of trading Bitcoin futures contracts with its new options on Bitcoin Friday futures. The options, which are subject to regulatory review, will provide investors with a new tool to manage risk.
"We are pleased to offer these new options that provide traders with even greater precision to manage short-term bitcoin price risk," said Giovanni Vicioso, CME Group Global Head of Cryptocurrency Products.
The CME's options launch on Bitcoin Friday futures could stir massive interest among skeptical investors who were previously concerned about the risks that may arise from trading BTC futures.
Cryptocurrency prices FAQs
Token launches influence demand and adoption among market participants. Listings on crypto exchanges deepen the liquidity for an asset and add new participants to an asset’s network. This is typically bullish for a digital asset.
A hack is an event in which an attacker captures a large volume of the asset from a DeFi bridge or hot wallet of an exchange or any other crypto platform via exploits, bugs or other methods. The exploiter then transfers these tokens out of the exchange platforms to ultimately sell or swap the assets for other cryptocurrencies or stablecoins. Such events often involve an en masse panic triggering a sell-off in the affected assets.
Macroeconomic events like the US Federal Reserve’s decision on interest rates influence crypto assets mainly through the direct impact they have on the US Dollar. An increase in interest rate typically negatively influences Bitcoin and altcoin prices, and vice versa. If the US Dollar index declines, risk assets and associated leverage for trading gets cheaper, in turn driving crypto prices higher.
Halvings are typically considered bullish events as they slash the block reward in half for miners, constricting the supply of the asset. At consistent demand if the supply reduces, the asset’s price climbs.
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