Replays · FOMC · 23 Mar 2020, 12:00 UK
The Fed removes the limit
This was not a normal Fed meeting. On Monday 23 March 2020, before US markets opened, the Fed announced that it would buy government and mortgage bonds "in the amounts needed" to keep markets working. A week earlier it had promised $500 billion of Treasuries and $200 billion of mortgage securities. Now there was no limit. Bitcoin's first hour ranks #2 of 80 Fed decisions in our data.
What the Fed announced
The statement went out at 8:00 a.m. New York time, 12:00 UK. Interest rates stayed at 0% to 0.25%, where they had been cut on 15 March. Alongside the open-ended bond buying, the Fed announced new lending programmes, including its first ever purchases of corporate bonds. CNBC called it the Fed's most aggressive market intervention to that point.
The hour
- 1 12:00 UK: the Fed statement
- 2 12:15 UK: Bitcoin already up almost 7%
- 3 13:05 UK: about 13% above the release price, near $6,630
Bitcoin was slow for five minutes, then rose quickly. It was almost 7% higher by 12:15 UK and touched about 13% above the release price at 13:05 UK, near $6,630. It finished the hour +8.1%, 17 times a normal hour. Ether and Litecoin rose by similar amounts.
| Market | 15m | 1h | 2h | 4h | 24h | × normal hour |
|---|---|---|---|---|---|---|
| Bitcoin | +3.47% | +8.06% | +7.39% | +6.35% | +15.17% | 17.3× |
| Ethereum | +3.48% | +8.06% | +7.03% | +5.19% | +14.71% | 13.7× |
| Litecoin | +4.96% | +8.89% | +6.59% | +6.01% | +11.22% | 12.5× |
| XRP | +2.56% | +5.07% | +4.08% | +3.21% | +8.32% | 7.2× |
| S&P 500 ETF (SPY) | −2.02% | −0.65% | −3.20% | −1.13% | – | – |
| Nasdaq-100 ETF (QQQ) | −1.78% | +0.06% | −2.54% | +0.01% | – | – |
Change from 12:00 UK. US stock ETFs open at 13:30 UK, so their early columns show pre-market trading.
Stocks behaved very differently. After the open at 13:30 UK, the S&P 500 ETF fell, and two hours after the announcement it was 3.2% below its 12:00 UK level. Crypto gave back part of its gain too: Bitcoin dropped from 13% to about 6% between 13:05 and 13:30 UK.
For context, Bitcoin had briefly fallen below $4,000 on 13 March during the worst of the pandemic sell-off. By 23 March it had already recovered to around $5,900, so the move after the Fed statement came on top of a partial rebound.
What it started
The next day, Bitcoin was 15% above the release price, and it ended the week +8.8%. In hindsight, the open-ended commitment is often seen as the start of the 2020 recovery across markets. But on the day itself, crypto reacted faster and more strongly than stocks, which kept falling into the afternoon.
Sources: release time and figures from the Federal Reserve's statement and target range (FRED DFEDTARU). Crypto: Bitstamp 5-minute candles; SPY/QQQ: IEX. No consensus forecasts are shown because they are proprietary; comparisons are with the previous release. “× normal hour” compares the first-hour move with the median move in matched quiet hours. How we measure it.