• Bitcoin hit $40,000 for the first time in a week after Fed chair Jerome Powell ruled out the possibility of a higher rate hike as most cryptos saw green.
• Cryptos have bounced harder than traditional equities, with experts saying that the Fed’s less aggressive tightening policy is bullish for this asset class.

After a rather bleak week in which it dipped to $37,500, Bitcoin has bounced back to hit $40,000 for the first time since April 28. BTC received a massive boost from Jerome Powell, the chair of the US Federal Reserve who yesterday ruled out any possibility of bigger rate hikes.

At press time, BTC is trading at $39,500 after a slight cool-off, but it’s still up by 1.23 percent for a $751 billion market cap. In that time, it hit an intra-day high of $40,002 even as the entire market rallied with Zilliqa, Waves and the Anchor Protocol leading the charts.

The gains came after positive news from Powell who stated, “A 75-basis-point increase is not something that the committee is actively considering. I think expectations are that we’ll start to see inflation, you know, flattening out.”

“The [Fed] … saved Bitcoin’s bacon,” said Jeffrey Halley, an analyst at broker Oanda. BTC had been “threatening a major downside technical breakout earlier in the day before the central bank announced its decision to raise interest rates,” he told the weekly magazine, Barron’s.

The price action overnight is suggestive of positioning, something I have been telegraphing the last few days, as opposed to a structural change in sentiment.

Nick Mancini, director of research at crypto sentiment analytics platform Trade The Chain, concurs. He believes that any FOMC guidance that doesn’t include a 0.75 percent interest rate increase is bullish for both crypto and equities.

He told CNBC, “We believe that the market has priced in continued hikes of 0.25% to 0.50% moving forward for 2022. This gives the market certainty, which, in turn, breeds bullish price action.”

Other experts share a similar view. One of them, Eaglebrook Advisors’ Joe Orsini opined:

If there are signs that inflation is peaking, the Fed has some room to show patience. A less aggressive tightening policy would be bullish for bitcoin, ether and digital assets, which continue to bounce harder than traditional equities.

There are other factors at play that could water down the effect that the announcement had on the market. According to Ben Lilly, a token economist at Jarvis Labs, one of them is the negative flow of funds in the industry.  He claimed:

Market saw some relief with Powell’s comments. But will it continue for the crypto market? To start, funding rates have been negative for a long period of time. This tends to happen at range lows.