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's price spiked higher immediately after the U.S. Federal Reserve cut interest rates by 50 basis points on Wednesday.
The Federal Open Market Committee (FOMC) did what many economists and traders predicted: It cut the benchmark federal funds rate to a lower range of between 4.75% and 5.00%.
"Recent indicators suggest that economic activity has continued to expand at a solid pace. Job gains have slowed, and the unemployment rate has moved up but remains low. Inflation has made further progress toward the Committee's 2 percent objective but remains somewhat elevated," the central bank said in a statement. "The Committee has gained greater confidence that inflation is moving sustainably toward 2 percent, and judges that the risks to achieving its employment and inflation goals are roughly in balance."
Regarding the possibility of further rate cuts, the central bank said, "In considering additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage‑backed securities."
"...the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals," the FOMC statement added.
Fed Chair Jerome Powell is scheduled to hold a press conference at 2:30 p.m. ET.
Analysts predict short-term market volatility
QCP Capital analysts expect that today's decision by the U.S. central bank will significantly influence financial markets in the medium to long term. They forecast heightened short-term market volatility following the Fed's decision to cut the benchmark rate.
"We are confident that volatility will be high in the days following the meeting, as traders readjust their positions over the next few weeks, and the regime change could also signal the start of strong macro trends," QCP Capital analysts said.
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While they foresee short-term volatility and potential price drawdowns, the analysts advise investors to concentrate on long-term opportunities. They recommend focusing on long-dated investment strategies with unlimited upside potential to benefit from possible substantial increases in bitcoin prices.
"While drawdowns and high volatility are expected, don't let it detract from the path to higher bitcoin prices, and we favor long-dated structures with unlimited upside to capitalize on potential parabolic advances in bitcoin prices," the analysts added.
Equities higher after Fed decision to cut rates
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