How did Bitcoin, gold and silver react to the US Federal Reserve’s statement?
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Answer How did Bitcoin, gold and silver react to the US Federal Reserve’s statement?
In a statement issued hours ago, US Federal Reserve Chairman Jerome Powell revealed a serious shift in fiscal policy aimed at adjusting the inflation rate.
As a result of this statement, gold, silver and bitcoin prices collectively rose immediately after the announcement.
Then these three assets also declined in a similar fashion after only minutes of rising.
The US Federal Reserve sets a record inflation target of 2%:
a statement Jerome Powell, Chairman of the Federal Reserve Board of the United States of America, said that the institution he chairs will change its approach to dealing with inflation in order to maintain low rates of inflation for a longer period.
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Some of Jerome’s statements came as follows:
Many find it illogical that the Fed would want to increase inflation.
But very low inflation can pose serious risks to the economy.
Comparing the economic situation now to what it was years ago, Jerome noted that under the new policy, the Fed would target inflation averaging 2% over time.
As a result, if the inflation rate is below the Fed’s target, which it has been for most of the past decade, the Fed will allow it to moderately rise above 2% for some time.
The central bank is expected to follow this statement and begin the implementation process with a pledge to continue to keep interest rates near zero until the economy can recover, while inflation reaches 2% in the long term.
“Inflation will now target an average of 2%. Meaning that after periods of inflation below 2% like now, we will aim for inflation above 2%! The new target range will not use any formula.”
We keep moving target flyers and fly blind …
🏦🖨️💵 #feed it #JacksonHole #brrr pic.twitter.com/VNHzCKzJT5
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– Alex Saunders 🇦🇺👨🔬 (@AlexSaundersAU) August 27, 2020
Alex Saunders, a cryptocurrency analyst, commented on the matter:
Bitcoin, gold and silver prices react to the news.
Global markets reacted to the news.
The prices of gold, silver and bitcoin, largely known for their inflation-hedge properties, were pumped in response.
The above chart shows the behavior of the three assets and how they are completely identical, as they rose after the news broadcast and returned to their normal level quickly at the same speed as the rise.
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Bitcoin price reached around $11592 on Binance before falling back to $11,400 where it is currently trading.
Both gold and silver underwent a similar pattern.
Interestingly, the same happened to stock markets, with the S&P 500, Nasdaq 100 and Dow Jones Industrial Average rising after the announcement, only to fall back soon after.
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