Replays · FOMC · 14 Dec 2022, 19:00 UK
Slower hikes, but more of them
By December 2022 the Fed had raised rates by 0.75 points four times in a row. Slowing to 0.5 points should have been good news for risk assets, and the day before, a cooler inflation report had lifted markets. But the Fed's projections showed rates going higher, and staying there, than many traders expected. Bitcoin fell on the first candle and kept falling for the week.
The decision
At 19:00 UK the Fed raised its target range to 4.25% to 4.50%. The median projection for the end of 2023 rose to 5.1%, which implied at least three more quarter-point hikes, and none of the officials expected cuts in 2023. A day earlier, November CPI had shown annual inflation easing to 7.1%, and some traders had hoped the Fed would sound softer as a result.
The hour
- 1 19:00 UK: decision and projections
- 2 19:30 UK: press conference begins
- 3 20:35 UK: Bitcoin about 3% below the release price, near $17,670
The first five minutes took Bitcoin 1.4% lower. It slipped further during Powell's press conference and reached its low, about 3% down, at 20:35 UK. It ended the hour -2.35%, 5.3 times a normal hour and #8 of 80 FOMC decisions in our data.
| Market | 5m | 1h | 24h | 1w | × normal hour |
|---|---|---|---|---|---|
| Bitcoin | −1.37% | −2.35% | −4.52% | −7.84% | 5.3× |
| Ethereum | −0.93% | −1.95% | −4.50% | −9.21% | 3.5× |
| Solana | −3.10% | −1.94% | −4.62% | −17.91% | 3.3× |
| Cardano | −1.76% | −1.50% | −4.26% | −19.50% | 2.8× |
| Litecoin | −0.62% | −0.83% | −5.23% | −13.96% | 1.3× |
| Chainlink | −0.88% | −1.32% | −5.12% | −13.60% | 2.0× |
| XRP | −0.92% | −1.20% | −2.76% | −11.39% | 1.8× |
| S&P 500 ETF (SPY) | −0.87% | −1.44% | – | – | – |
| Nasdaq-100 ETF (QQQ) | −1.25% | −1.73% | – | – | – |
Change from the 19:00 UK decision.
Stocks fell at the same pace: the S&P 500 ETF lost 1.4% in the hour and the Nasdaq 100 ETF 1.7%. Several crypto coins actually fell less than the stock ETFs in the first hour.
The overall picture after the first hour was a slow bleed rather than a crash. Bitcoin hovered between 2% and 3% below the release price for the rest of the evening and was -2.1% at four hours.
A market with no cushion
This was a month after the collapse of FTX, and the crypto market was thin and nervous. Over the next week the selling grew. Bitcoin was 7.8% lower after seven days, Solana 18% and Cardano 20%. The pound also fell. The Bank of England and the European Central Bank both raised rates by half a point the following day, and sterling was 3.0% lower against the dollar a week later.
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.