Bitcoin Jumps to 3-Week High Above $8,600 as Fed Plans New Round of Reserve Increases

View The Fed's decision to expand its balance sheet is seen as a long-term positive development for bitcoin by crypto market experts.

Bitcoin jumped 5.9 percent on Wednesday to the highest price in three weeks, after the Federal Reserve said it would print money to expand the size of bank reserves - seen as a move by the U.S. central bank that could spark inflation.

13 as of 18:22 UTC time, according to CoinDesk's Bitcoin Price Index.

Bitcoin suffered a steep drop in late September, tumbling from above $10,000, a move analysts attributed to big margin calls on the Bitmex exchange and disappointment over the debut of a new futures contract on the Intercontinental Exchange's Bakkt digital-asset trading platform.

Powell said the Fed may have to keep pumping money into the financial markets by buying securities in the coming days in order to ensure the smooth functioning of short-term lending markets.

Joe DiPasquale, CEO of the cryptocurrency-focused investment firm BitBull Capital in San Francisco, said in a phone interview that bitcoin prices typically rise when the Federal Reserve loosens monetary policy - such as earlier this year, when the central bank's first interest-rate cuts in a decade helped push prices to a 2019 high around $12,900 in late June.

Matt Hougan, the firm's global head of research, told CNBC on Monday that "We're closer than we've ever been before to getting a bitcoin ETF approved." A decision is due by Monday, Hougan said.

"There's some hope in the industry which would make it much easier for people to purchase bitcoin," DiPasquale said in the interview with CoinDesk.

DiPasquale said he thinks the proposal might be rejected, which could send bitcoin prices back down below $8,000.

Many observers are of the opinion that the QE programs are inflationary in nature and consider bitcoin as a hedge against such policies.