Key Points
- Bitcoin’s (BTC) price experienced a 12% increase following the U.S. Federal Reserve’s decision to maintain current interest rates.
- Despite outflows from U.S. spot Bitcoin exchange-traded funds (ETFs), Bitcoin’s value remained resilient.
Bitcoin’s (BTC) value rose on March 21, following a sudden recovery that saw a 12% price increase. The cryptocurrency showed stability after the significant bounce back from the previous day.
Impact of Federal Reserve’s Decision
Bitcoin’s positive response was due to the U.S. Federal Reserve’s choice to keep interest rates at their current levels. After the Federal Open Market Committee meeting, Fed Chair Jerome Powell hinted at the possibility of rate cuts later in the year. The committee stated it would not be appropriate to lower the target range until there was more confidence that inflation is moving sustainably towards 2 percent. As a result, Bitcoin avoided another retest of $60,000 support, instead rising to $68,000 and completely reversing its earlier losses.
Market Reactions and Predictions
Predictably, shorters suffered during this upward move. Data from CoinGlass showed that total short BTC liquidations for March 20 amounted to $70 million. Meanwhile, outflows from U.S. spot Bitcoin ETFs did not further impact market sentiment. According to UK-based investment firm Farside, $261 million exited the new ETF products on March 20, driven largely by $386 million in outflows from the Grayscale Bitcoin Trust (GBTC). However, other ETFs experienced inflows, albeit a small fraction of the daily revenue earlier in the month.
Despite Bitcoin’s lack of reaction to a third consecutive day of outflows, market observers remained optimistic. The cryptocurrency’s resilience in the face of ETF forces was noted. Samson Mow, CEO of crypto adoption firm JAN3, suggested that even GBTC would eventually see net inflows. He concluded by stating that all Bitcoin ETF outflows will ultimately become inflows, advising market participants to plan accordingly.
