Bitcoin surpassed $85,000 after the Federal Reserve indicated a slowdown in quantitative tightening, signaling potential rate cuts. This shift has rejuvenated bullish sentiment in crypto markets, although concerns about economic growth and inflation remain.

Bitcoin has recently surged past $85,000 following a pivotal shift in the Federal Reserve’s monetary policy, indicating a slowdown in quantitative tightening. This sparked optimism across cryptocurrency markets, with expectations of potential rate cuts beginning as early as June, thereby reigniting bullish sentiment despite existing risks in the market.

Following the Federal Open Market Committee (FOMC) announcement, Bitcoin’s rally was interpreted as a positive signal for risk assets. The Fed’s decision to ease its quantitative tightening program, starting in April, is perceived as a precursor to broader monetary easing. Market analysts from QCP Capital characterized this shift as a covert rate cut, anticipating continuous rate reductions in June, September, and December 2025.

Nonetheless, the Fed’s communication was tinged with caution as it adjusted U.S. GDP growth projections down to 1.7% while raising its inflation forecast to 2.8%, raising concerns about potential stagflation. The updated projections also indicate a shift among officials, with an increased number expecting no rate cuts for the upcoming year, diverging from previous expectations.

In the crypto options market, sentiment has notably shifted from a preference for put options to a stronger demand for call options, suggesting a more optimistic outlook among traders. As market participants closely monitor U.S. market reactions, the durability of Bitcoin’s breakout remains in question against a backdrop of macroeconomic uncertainties.

In summary, Bitcoin’s rise past $85,000 is attributed to a favorable shift in the Federal Reserve’s policy, which signals a potential easing in monetary policy. While there are signs of renewed optimism and bullish positioning in the market, caution persists due to revised economic forecasts from the Fed, raising concerns about stagflation. The authenticity and sustainability of this rally will be contingent on how the U.S. markets respond in the coming weeks.

Original Source: news.bitcoin.com

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