Summary

Bitcoin (BTC) is looking towards the upcoming Federal Reserve’s decision regarding interest rates, particularly the anticipated pause in its balance sheet runoff under a process called quantitative tightening (QT).

Key Points:

• The Fed is projected to maintain the current interest rate range of 4.25% to 4.50%.
• A halt in QT may signal a shift towards a new monetary policy, beneficial for risk assets including BTC.
• Potential stagflation adjustments revealed in economic projections may dampen the expected gains.

As Bitcoin attempts to rebound from its recent drop, market analysts see the Fed’s announcement as crucial, especially regarding its approach to QT, which has been reducing its $9 trillion balance sheet. Some forecasts suggest Powell may indicate a pause in QT, previously hinted at for 2025.

Acheson emphasized the importance of additional liquidity from the Fed in maintaining market stability amidst approaching $9 trillion in maturing Treasury obligations this year. Goodwin concurred that ending QT sooner could deliver a favorable signal for the financial market.

Traders’ Expectations

Traders on the decentralized betting platform Polymarket predict a 100% likelihood that QT will conclude before May, with notable implications for Bitcoin and broader market dynamics.

Amid the complexities of Trump’s trade tariffs, investment banks, including Bank of America, speculate on how upcoming statements will further influence economic forecasts and adjust monetary strategies accordingly. The final summary of the economic projections by the Fed could suggest inflation risks and a potential impact on future rate cuts.