The Federal Reserve and FOMC will slash rates today–either by 25 or 50 basis points. Bitcoin and crypto prices might benefit – here’s what you need to know.
Less than 24 hours before the United States Federal Open Market Committee (FOMC) and the Federal Reserve (Fed) prepare to announce their interest rate decisions, the crypto market is edged but bullish.
Traders are upbeat, confident that the bear run of the past few months after the race to all-time highs back in March, could, after all, be coming to an end.
Bitcoin Price Is Back Above $60,000: Crypto Markets Position For FOMC
There are hints here and there. First, Bitcoin
Price
Trading volume in 24h
Last 7d price movement
is back above $60,000, confirming the uptrend started by the September 13 bar.
(BTCUSDT)
Last Friday, prices soared unexpectedly, breaking above the local resistance and round number—a refreshing move.
However, bulls didn’t follow through over the weekend, and prices printed discouraging lower lows before yesterday’s spike.
Technically, buyers have a chance, especially if gains confirm yesterday’s gains.
Second, fundamentals favor buyers. On-chain data shows that Bitcoin could be forming a bottom following the rejection of lower lows in early August and September.
Reserve Risk since 2010:
Bitcoin all time high of $73k didn’t even break the green zone. Now almost a full reset as price builds a base. Bullish.
— Riggs (@RiggsBTC) September 18, 2024
Inflation in the United States is falling while the economy is simultaneously creating more opportunities.
Additionally, there is politics to consider.
Some analysts think if Donald Trump, the GOP presidential nominee, wins, Bitcoin prices will break above $100,000 by the end of the year.
This is literally the end game and a cements the Bitcoin Standard for the next century if passed.
U.S. Strategic Bitcoin reserve would target 5% of the total Bitcoin supply which is 4x the current 212k BTC confiscated holdings. $BTC pic.twitter.com/v4Fc6UzSxU
— McKenna (@Crypto_McKenna) July 27, 2024
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But First Things First: All Eyes On the Federal Reserve and Powell
Ahead of the elections, eyes are on the Federal Reserve and the FOMC.
Today, investors expect the central bank to slash rates.
The thing is, once rates are lower, risky assets and value-preserving vehicles like Bitcoin and gold will benefit.
Since the odds of a rate cut are higher, the question is how much the Fed will drop rates.
Looking at online forums, the magnitude is precisely the source of all the uncertainty.
There is debate that the Fed will opt to slash by only 25 basis points–currently at 63% probability
Others say the central bank will be more aggressive, dropping rates by 50 basis points–a 37% chance.
(Source)
Accordingly, unlike in the past, the decision that the Fed makes on September 18 will be far more impactful.
Reflecting on this is the generate state of market volatility in recent weeks.
Bitcoin, for instance, is recovering, while gold is at near all-time highs.
Here’s What To Watch Out For During The FOMC Rate Cut Announcement
Therefore, ahead of the FOMC interest rate decision, here’s what to look out for:
- If the Fed slashes rates, it will be good to watch out for the magnitude. A 50 basis points drop will be more aggressive, a move that will likely pump Bitcoin to over $66,000 by the end of the day. If the central bank will decrease rates by 25 basis points but Jerome Powell remains dovish, then BTC will equally fly.
Traders should also closely watch the Federal Reserve’s “dot plot.” This provides insights into the central bank’s monetary policy direction. An outlook that leans on more rate cuts in 2025 will be bullish for Bitcoin.
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Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
