How will the Fed's downsizing of assets affect the Bitcoin market?

After the Federal Reserve announced a gradual slowdown in growth, the price of Bitcoin and the stock market rose.

Yesterday, the Federal Reserve Committee announced that it would accelerate the reduction of its asset scale to US$30 billion per month, twice the original amount, which is slightly higher than the market’s consensus. Jerome Powell (Jerome Powell) emphasized that the planned and methodical method of reducing asset purchases is a more stable method for the market, rather than ending all asset purchases today. The current plan is to end asset purchases by March 2022. The market expects that there is a high possibility of three interest rate hikes in 2022, with an increase of 100 basis points.

Forecast of when the Fed will raise interest rates

Regarding cryptocurrencies, Powell believes that they are not a major financial stability issue, but the leverage in his system is worthy of attention. He pointed out that cryptocurrencies are risky and speculative, and emphasized the potential benefits of stablecoins if they are regulated.

Nevertheless, Powell made a lot of dovish comments in his Q&A, suggesting that the Fed is prepared to adjust its monetary policy when necessary and adopt a more accommodative monetary policy. This is a favorable short-term signal for the market. If interest rates are raised in March, we will see real monetary tightening begin to take effect in the market.