Bitcoin Surges as Fed Signals Policy Shift

According to BlockBeats, the recent FOMC meeting provided a significant boost to the market, propelling Bitcoin's price beyond $85,000. The Federal Reserve announced plans to reduce its 'quantitative tightening' strategy starting in April, which the market interpreted as an indirect rate cut. This has strengthened expectations that the Fed might begin easing policies as early as June. As of now, the market anticipates three rate cuts in 2025, scheduled for June, September, and December. Despite the current optimism, the Fed's tone remains cautious. Policymakers have lowered the economic growth forecast to 1.7%, a reduction of 0.4 percentage points, while raising the inflation expectation to 2.8%, indicating rising stagflation risks. Additionally, the Fed's dot plot reveals a more hawkish stance compared to December last year, with an increase in the number of officials not expecting rate cuts in 2025 to four. In the options market, positioning has normalized, with skew shifting back towards call options. This marks a contrast to earlier in the week when skew favored put options. The key test will occur when the U.S. market opens tonight.