- The President of the Boston Federal Reserve, Susan Collins, indicated that the organization is ready to implement measures to support market stability if liquidity issues arise.
- Bitcoin bounced back to the $83,000 level on Thursday after Collins’ remarks and a lower-than-anticipated PPI report.
- Ethereum, XRP, and Solana also experienced gains in conjunction with Bitcoin.
On Friday, Bitcoin (BTC) surged 5%, trading just shy of $84,000 after comments from Susan Collins, the head of the Boston Fed, suggested that the agency could employ “various tools” to help stabilize the markets if necessary.
Bitcoin and other cryptocurrencies rebound as Fed official signals potential intervention
In a recent interview, Collins shared that the Fed is prepared to utilize “various tools” to stabilize markets should liquidity issues become a concern.
While a shift in interest rates is typically anticipated, she mentioned that the Fed has other instruments at its disposal to manage monetary policy effectively.
“The core interest rate tool we employ for monetary policy is certainly not the only option available, and it may not be the most effective way to tackle liquidity or market functioning challenges,” she noted.
Her remarks come amid increasing signs of uncertainty in the bond market, where investors are retreating from the 10-year Treasury Note—a benchmark for mortgages and long-term loans—causing its yield to rise to nearly 4.5% despite prevailing risk-averse sentiment in stocks.
During the Treasury market’s turmoil following the COVID-19 pandemic in 2020, the Fed intervened by purchasing government bonds to lower yields and stimulate economic activity. At that time, Bitcoin was valued around $5,000 but quickly soared after the intervention, eventually exceeding $60,000 within a year.
The response from the crypto market in light of Collins’ comments suggests that investors are expecting a similar Fed intervention if Treasury prices continue to decline.
Bitcoin rallied 5% on Friday, climbing above $80,000 to nearly $84,000 at the time of reporting, effectively reversing more than a 4% decline from Thursday, which was driven by lingering global trade war anxieties.
The leading cryptocurrency’s increase positively impacted nearly all other coins within the top 30, with Ethereum (ETH), XRP, Solana (SOL), and Dogecoin (DOGE) rising by 3%, 2.5%, 8%, and 4%, respectively.
This optimistic movement in the crypto market comes on the heels of the Producer Price Index—a measure of price inflation for goods sold by domestic producers—declining 0.4% month-on-month, marking its largest decrease since October 2023. This follows lower-than-expected CPI data for March, which registered a decrease to 2.4% from 2.8% in February.