The Federal Reserve raised rates by half a point on Wednesday, the biggest hike in 20 years.
The Federal Open Market Committee is having a meeting. Many expected the half-point hike to happen. The surge accelerated after Powell ruled out a 75-basis-point increase.
Powell said that a 75-basis-point increase is not something the committee is considering.
At one point during Powell's remarks, it climbed as high as $40,002.50. The market for cryptocurrencies rose with it.
The director of research at Trade The Chain said that any guidance that does not include a 0.75 percent interest rate increase would be bullish for both the equity and thecryptocurrencies. This gives the market certainty, which leads to bullish price action.
With inflation at 40-year highs, the market expected the most aggressive tightening schedule in the same amount of time, according to Joe Orsini, director of research at Eaglebrook Advisors.
The first sign of this was today when Powell said that the Fed would turn less hawkish than he thought.
Risk assets have been hit all year by rising inflation, war in Ukraine and tighter Fed policy, which has made it difficult for the digital currency to return to its all-time high of $68,000. Since the beginning of the year, the volatility of the coin has come down, as it has traded in a tight range, below shares of some tech darlings.
The Fed has some room to show patience if there are signs that inflation is peaking.
There was a rally in the broader market. The S&P 500 closed 2.9% higher, while the Nasdaq gained more than 3%. The index added over a thousand points.
The stock market moves are highly correlated with the price of Bitcoin.
Josh Olszewicz is head of research at digital assets investment manager Valkyrie Funds.
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