What to know:
- Bitcoin (BTC) briefly reached $106.5K before falling back to $104,500 amid market unease over the Federal Reserve's upcoming actions.
- Following rumors, the Fed may implement a 'hawkish rate cut', signaling possible constraints on future easing plans.
Bitcoin surged to over $106,000 early during Asian hours, marking a new record before it quickly fell back to $104,500, as anxiety about the U.S. Federal Reserve's rate decisions grew.
The U.S. central bank is expected to reduce its benchmark borrowing cost by 25 basis points to a range of 4.25% to 4.5%, which would total a 100 basis point easing since September. Some market analysts believe, however, that the accompanying commentary from the Fed may curb expectations for additional cuts, which could weaken the positive market sentiment arising from the rate change.
The Fed will reveal its rate decision and economic forecasts on December 18 at 14:00 ET, followed by a press conference with Chair Jerome Powell half an hour later.
According to a recent dot plot, prior expectations for rate cuts are anticipated to be moderated. Marc Chandler, Chief Market Strategist at Bannockburn Global Forex, commented on the probable 'hawkish rate cut', suggesting that the Fed may believe the economy to be more robust than previously assessed, providing them room to adjust their stance defensively.
This week, further economic indicators will follow, potentially clarifying whether rising inflation is a fleeting occurrence or indicative of broader trends.
