Replays · FOMC · 17 Mar 2021, 18:00 UK

The Fed promised to wait, and Bitcoin went up

Decision: Hold at 0% to 0.25%
Time: 18:00 UK (the US had moved its clocks, the UK had not)
Bitcoin at release: $55,581
First hour: +3.7%, #5 of 80 FOMC decisions
Peak in four hours: about +5.7%, near $58,760, at 21:35 UK

In March 2021, inflation was starting to rise and long-term bond yields had climbed for weeks. Markets wanted to know whether the Fed would respond. Its answer was no: the median official expected to keep rates near zero until at least 2024. Bitcoin, already near its all-time high, rose for most of the evening.

What the dots said

The Fed kept its target range at 0% to 0.25%, as expected, and continued buying bonds. The important part was the projections. Officials now expected much stronger growth in 2021, yet the median forecast still showed no rate hike through the end of 2023. Jerome Powell said the Fed would not react to an expected rise in inflation that it believed would be temporary.

Five hours of buying

1 18:00 UK: decision and projections
2 18:30 UK: press conference begins
3 21:35 UK: Bitcoin about 5.7% above the release price

Bitcoin, five-minute candles from 30 minutes before to five hours after. % from the 18:00 UK price of $55,581. Source: Bitstamp.

The rise wasn't a single jump. Bitcoin added about 1% on the first candle, about 2% by 18:15, and then climbed in steps through the press conference and into the night. By the end of the first hour it was 3.7% higher, 8.6 times its normal hour. At four hours it was 5.2% up.

Change one hour after the decision.

Unusually, Bitcoin led the market. Ether rose only 1.8%, and Chainlink barely moved. Tech stocks liked the news too: the Nasdaq 100 ETF was 1.9% higher an hour after the decision.

The pound rose too, finishing +0.36% against the dollar at the next fix, which fits a weaker dollar after the Fed signalled patience.

A short-lived relief

The next day the US 10-year Treasury yield rose to its highest level in more than a year, and the tech rally reversed. Bitcoin held up longer: it was still 6.5% above the release price after 24 hours, but only 1.0% after a week. Ether was 5.2% lower by then. XRP, which had hardly reacted on the night, rose 16% over the week.

Note the time. US clocks had changed on 14 March and UK clocks didn't change until 28 March, so this decision came at 18:00 UK rather than the usual 19:00.

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.