Replays · FOMC · 28 Jul 2021, 19:00 UK
A hawkish word, and a rally anyway
In summer 2021 the market's question was when the Fed would start to slow its $120 billion a month of bond buying. The July statement took a small step towards it. Crypto ignored the step and rallied for an hour.
- 1 18:00 UK: Bitcoin slides about 3% before the statement
- 2 20:00 UK: high, about 4.6% up
The statement
Rates stayed at 0–0.25% and the bond buying continued at $80 billion of Treasuries and $40 billion of mortgage bonds a month. The new line was that since December, "the economy has made progress toward these goals", meaning the conditions for tapering. In the press conference, Powell said the Fed was still "some way away" from the "substantial further progress" it needed on jobs, and that he wanted to see some strong job numbers.
The hour
Bitcoin fell about 3% in the hour before the statement, and it was $38,917 at 19:00 UK. Then it climbed steadily through the press conference. It was +4.0% after an hour, 9.3 times a normal hour. That ranks #4 of 80 Fed decisions in our data, and only three had a bigger first hour. Bitcoin's high, about 4.6% up, came at 20:00 UK.
US stocks barely moved. The S&P 500 ETF was +0.34% after an hour, so this was a crypto move, not a broad market one.
| Market | 15m | 1h | 4h | 24h | 1w | × normal hour |
|---|---|---|---|---|---|---|
| Chainlink | +2.20% | +4.77% | +2.41% | +1.55% | +30.94% | 7.1× |
| Bitcoin | +1.37% | +4.00% | +3.09% | +1.82% | +1.23% | 9.3× |
| XRP | +1.83% | +3.46% | +2.52% | +1.94% | +5.66% | 5.2× |
| Litecoin | +1.11% | +3.44% | +5.27% | +4.78% | +5.86% | 5.8× |
| Ethereum | +1.00% | +2.70% | +1.94% | +3.00% | +18.43% | 4.9× |
Change from the 19:00 UK statement, sorted by the first hour.
Every coin rose
Chainlink had the biggest first hour, +4.8%. Litecoin kept going after the others stalled and was +5.3% at four hours. Bitcoin gave back a little and was +3.1% at four hours and +1.8% at 24.
The one-week column is different. Ether was +18% and Chainlink +31% a week later, while Bitcoin was only +1.2%. Those gains came in the following days and don't trace back to the statement.
A statement that nudged towards less support was followed by one of the biggest Fed-hour rallies we have recorded. Bitcoin's fall in the hour before the statement may have left room for a bounce.
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.