The crypto market is surging Wednesday afternoon, led by Bitcoin (CRYPTO: BTC) and Ethereuem (CRYPTO: ETH), after the Federal Reserve raised the target fed funds rate by three-quarters of a percentage point.
The Fed on Wednesday hiked rates by 0.75%, bringing its target fed funds rate up to a range of 2.25% to 2.5%.
The bond market had been pricing in a 50% chance that the Fed would raise rates by 1%, as reported by Benzinga earlier in July. The 0.75% hike is easing concerns surrounding the potential for a more aggressive 1% hike in order to further curb inflation. Many view Bitcoin as a speculative inflation hedge because of its fixed supply. A more aggressive anti-inflationary decision by the Fed could have reduced the demand for inflationary hedge assets
The central bank said it will continue to reduce Treasury securities, agency debt and agency mortgage-backed securities from its balance sheet on a monthly basis.
"Recent indicators of spending and production have softened. Nonetheless, job gains have been robust in recent months, and the unemployment rate has remained low. Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher food and energy prices, and broader price pressures," the Fed said in a statement.
$BTC, $ETH Price Action: Bitcoin and Ethereum charged higher following the FOMC statement.
At press time, Bitcoin was up 5.33% over a 24-hour period and up 1.66% over the last hour. Ethereum has jumped 11.95% over a 24-hour period and was up 2.57% over a one-hour period at time of publication.
Photo: Eivind Pedersen from Pixabay.