Recaps · FOMC · 21 Sep 2022, 19:00 UK
Down, back, and down again
A third 75 basis point hike was expected. The new projections were tougher than many traders hoped. Bitcoin and stocks fell on the release, recovered almost fully while Powell spoke, and then fell further in the evening. The first hour on its own told the wrong story.
- Decision
- Wednesday 21 September 2022, 19:00 UK
- Rate
- +75bp to 3.00% to 3.25%
- Projections
- 4.4% by end-2022, 4.6% in 2023 (Fed)
- Bitcoin at decision
- $19,824
- Bitcoin, 4 hours later
- -6.9%
The decision
This was the Fed's third 75 basis point hike in a row, taking the target range to 3.00% to 3.25%. The median projection put rates at 4.4% by the end of 2022 and 4.6% in 2023. Powell said the Fed would keep going until inflation was clearly coming down (Fed transcript). Reuters reported that the Dow and S&P 500 each closed 1.7% lower.
Three stages in four hours
- 1 19:00 UK: decision, Bitcoin about -4.5%
- 2 20:00 UK: back to about -1%
- 3 22:30 UK: low, about -7.4%
Bitcoin fell -4.5% in the first five minutes. During the press conference it recovered to -0.94% at 20:00 UK. Stocks did the same: the S&P 500 ETF went from -1.6% to +0.1%. Both then turned down again. The ETF was -2.5% at the 21:00 UK close, and Bitcoin kept falling after the stock market shut, to about 7.4% down at 22:30 UK.
The first hour ranks only #28 of 80 Fed decisions in our data, at 2.2 times a normal hour, because the price came back almost to where it started. Measured at four hours, -6.9%, the day looks very different.
| Market | 5m | 1h | 4h | 24h | 1w | × normal hour |
|---|---|---|---|---|---|---|
| Bitcoin | −4.51% | −0.94% | −6.87% | −3.76% | −2.40% | 2.2× |
| Ethereum | −4.69% | −1.18% | −10.12% | −7.44% | −5.09% | 2.1× |
| Litecoin | −2.32% | +2.16% | −5.80% | −2.38% | −2.14% | 3.6× |
| Chainlink | −1.97% | +2.54% | −6.76% | −1.55% | +12.11% | 3.8× |
| Solana | −1.98% | +3.74% | −3.95% | +0.70% | +3.40% | 6.2× |
| Cardano | −1.90% | +4.30% | −2.18% | +1.55% | −1.89% | 8.1× |
| XRP | −2.02% | +6.34% | −1.99% | +13.03% | +8.29% | 9.6× |
Change from the 19:00 UK decision, sorted by the first hour.
What a trader could take from it
A recovery during the press conference is not the same as a verdict. In December 2022, Bitcoin was down 2.3% at the hour and stayed there. Here the hour mark hid a much larger fall that came later. Checking the move at two and four hours, and after the US stock close, gives a better picture of how a Fed day was received.
Ether fell most, -10.1% at four hours. XRP went the other way over the next day, +13% at 24 hours while Bitcoin was -3.8%.
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.