The price of the most important cryptocurrency could rise sharply this week if the US Federal Reserve gives any indication that the pace of price increases will slow this year.
There are expectations from investors about a possible rally in the markets in the coming days, as a result of the Federal Reserve’s announcement of a change in key interest rates on Wednesday.
This expectation is shared by both institutional players such as investment banks but also by members of the crypto community. However, opinions are still divided as to what form this gathering will take and the exact conditions needed to bring it about.
Analysts expect the Fed to raise interest rates by 75 basis points this week, but economists are unsure what will happen at the next Fed meeting in December. The market also shares the expectation of a 75 basis point hike at this week’s meeting, with CME’s FedWatch tool currently indicating an 86% chance that the Fed will raise interest rates by 75 basis points.
Note that the tool also indicates that there is a 14% chance that the main rates will increase by only 50 basis points, which could lead to a rally in the entire cryptocurrency market.
according to communication From investment bank Merrill Lynch, discussions about a possible slowdown in interest rate hikes from December have already been held within the Fed. The bank is already expecting to see Fed Chairman Jerome Powell speak soon on the content of these discussions, which would open the door to a 50-point rally for December.
Similarly, Goldman Sachs, another well-known Wall Street bank, said through a newsletter that it also estimates there will be a 75 basis point increase this week, likely to be followed by a 50 basis point increase in December.
We expect the FOMC to peg this slowdown to 50 basis points in December, with interest rates higher towards the end of the year. We add another 25 bps increase to our own outlook, which now indicates rises of 75 bps in November, 50 bps in December, 25 bps in February and 25 bps in March. »
Will Powell’s comments cause a rally in the cryptocurrency market?
The question now is whether Powell’s comments about a possible slowdown in rate hikes starting in December will be enough to get the crypto market back on track after several months of bearishness.
On Twitter, a large number of users are hoping for this scenario to happen, and some are quick to claim that the price of bitcoin It will explode once the Fed makes its announcement on Wednesday.
Others such as Alex Krûger, a popular cryptocurrency trader and economist on Twitter, say they believe that not only the Bitcoin price will rise this week in the Fed’s announcements, but also that of Ethereum.
However, it is impossible to predict exactly how this week will unfold in the markets. But with the surprises of the past few weeks, especially with regards to bitcoin’s rally from $19,000 to $21,000, the words of enthusiastic and bullish investors are becoming more credible.
Does Bitcoin Price Provide An Early Signal Of The Fed’s Pivot To Come? Wednesday’s announcement will answer that question.