Bitcoin surged over 4% after the U.S. Federal Reserve's decision to hold interest rates steady. The rise coincided with a crypto market rebound and anticipation of a Senate debanking inquiry.
Bitcoin's Rise and Influencing Factors
On January 29, Bitcoin climbed 4.5% to approximately $105,000 following the Federal Reserve's decision to keep interest rates unchanged. Markets quickly returned to riskier assets after five consecutive days of losses. The surge coincided with market efforts to recover from a downturn caused by the Chinese AI startup DeepSeek, which sent stocks and crypto spiraling. The correlation between stock and crypto markets tightened amid recent inflation concerns, reflecting a risk-averse sentiment earlier this month.
Powell's Statement and Its Significance
During a press conference following the Federal Open Market Committee meeting, Jerome Powell made comments on cryptocurrencies, marking a noticeable shift from the previous U.S. administration's stance. Powell stated, "Banks are perfectly able to serve crypto customers as long as they can understand and service the risks." This statement signaled a change in how banks can engage with the crypto sector, notably differing from the Biden era's hardline approach.
U.S. Senate Probes Crypto Debanking
On February 5, the U.S. Senate Banking Committee is set to hold a hearing on debanking practices targeting the crypto industry. Three witnesses - Nathan McCauley, Evan Hafer, and Stephen Gannon - are expected to reveal the specifics of how and why banks severed ties with crypto businesses. The hearing aims to uncover whether banks selectively cut off clients due to political or regulatory reasons.
The cryptocurrency market remains influenced by regulatory bodies and economic factors. As market sentiment improves following the Fed announcements and the Senate's debanking inquiry, further developments are anticipated.
