Bitcoin experienced a rapid recovery Thursday, gaining nearly 3% amidst shifting market sentiment that replaced Federal Reserve policy anxieties with renewed interest in proposals for strategic Bitcoin reserves.

The price surge occurred despite the Federal Reserve holding interest rates steady and signaling caution about future cuts at the conclusion of the Federal Open Market Committee (FOMC) meeting.

Fed Meeting Tone Moderates Market Concerns

Market participants expressed concern following a seemingly hawkish tone at the conclusion of the FOMC meeting, which favored maintaining current rates.

“Data reported over the past couple of weeks reveal broader-based weakness…” remarked Federal Reserve Chair Jerome Powell in a press conference following the meeting. He acknowledged “somewhat elevated” inflation but emphasized the “solid” state of the labor market.

Though committed to gradual policy adjustments, Chair Powell stated that upcoming employment data would be of critical importance, underscoring misgivings surrounding continued labor strength.

Discussions surrounding imminent or expanded quantitative easing dimmed slightly amid these comments, according to data compiled from CME Group’s FedWatch Tool (now favoring holding rates steady through September). Chair Powell notably deferred questions regarding potential near-term rate reductions.

Strategic Reserve Potential Dominates Narratives

Executive Director of the President’s Council on Advisors on Digital Assets, Robert “Bo” Hines, substantially altered the conversation.

“We understand the importance of the strategic Bitcoin reserve, we’re enormous fans of Bitcoin… we want to deliver for them as well, and I’m certain that we will,” declared Hines.

The intervention quickly reshaped market narratives, channeling enthusiasm once more toward the prospect of a US government-backed Bitcoin reserve.

Institutional Buying Resurfaces Amid Volatility

Despite persistent market volatility, the crypto liquidation landscape saw elevated activity.

“While you were worrying about the Fed, corporate Bitcoin treasury buys neared one of their highest volume days ever,” observed Charles Edwards, CEO of Capriole Investments, referencing trading platform data for July 29-30.

CoinGlass tallies placed cross-crypto liquidation volume close to $500 million for the most recent 24-hour period.

Nevertheless, data indicated a remarkable resurgence in institutional buying within the crypto sphere, culminating in Capriole Investment data suggesting nearly 30,000 BTC acquired via treasury channels over a 48-hour span.

This influx solidified institutional positioning, with Capriole highlighting that this level of buying by professionals was last matched in August 2020.