FOMC Bitcoin Impact?
Crypto markets are closely monitoring the influence of Donald Trump and Jerome Powell. Will BTC rise after the significant FOMC meeting on January 29?
In November last year, Trump suggested his administration would consider lowering interest rates to relieve consumer pressure. Since that time, the Federal Reserve has slowed down interest rate cuts and hinted that they will not ease as quickly as previously anticipated in 2025. This factor negatively affected both the crypto and equities markets. Prices initially dropped after these statements, but buyers quickly acquired coins at discounted rates.
Now, with the FOMC meeting approaching on January 29, market attention is at its peak. The stakes are high, and the Fed is expected to make surprises. During Trump’s presidency, his advisors prefer lower rates to stimulate economic recovery. However, whether the Fed will be more aggressive (tightening rates) or more accommodating (lowering rates) depends on several economic indicators, particularly including inflation, GDP growth, and job market status.
Eyes On the Federal Reserve: Will They Raise Or Slash Rates?
Given Trump’s objectives for the next four years, the world is watching closely. The president aims to reintroduce tariffs, decrease corporate taxes, and create an environment conducive to the success of American enterprises. Expectations have driven bond yields above 4.50%, and economists predict domestic productivity growth, further increasing inflation.
Morgan Stanley reported it is likely the Fed will maintain rates steady in their upcoming meeting, adjusting their outlook on the labor market to ‘stable’ instead of ‘cooling.’ The economy has demonstrated improved job creation and showing signs of robustness.
Market Analysis
It is anticipated that Jerome Powell might indicate that the Fed will continue to respond to data, keeping a close watch on labor market and inflation metrics. He could also signal a willingness to cut rates by March 2024.
Overall, Fed communications will remain cautious yet optimistic, considering all economic uncertainties. Their primary directive will be to maintain inflation near the 2% benchmark.
Will Bitcoin Price Soar After FOMC?
The reaction of the crypto market hinges on whether the Fed chooses to hold or cut rates on January 29.
If the Fed unexpectedly reduces rates, Bitcoin could see a significant price increase as investors shift into speculative assets and equities. In such a scenario, Bitcoin could surpass $110,000, potentially reaching $120,000.
Conversely, should the Fed maintain its rates and adopt a hawkish stance, akin to projecting lower rates, Bitcoin may drop below $100,000, potentially crashing under $90,000. In this case, capital would likely flow back into treasuries, which have seen yield increases in recent weeks.
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Disclaimer: Crypto is a high-risk asset class. This article is for informational purposes and does not constitute investment advice. You could lose all of your capital.
