Bitcoin Traders Focus on Key Federal Reserve Data Ahead of Meeting
The Federal Reserve is anticipated to maintain its current interest rates, with an announcement scheduled for Wednesday at 18:00 UTC.
Key Highlights
- The Federal Reserve is poised to keep interest rates steady, with no changes expected during the upcoming meeting.
- Crypto investors are scrutinizing the Fed’s interest rate dot plot, which may impact market movements depending on the rate cut projections.
- A hawkish tendency from the Fed could put pressure on bitcoin prices and affect U.S. fiscal conditions by escalating debt servicing costs.
The Fed’s Open Market Committee, composed of 12 officials, is slated to reveal their interest rate decision at 18:00 UTC on Wednesday, followed by a press conference by Chairman Jerome Powell half an hour later.
According to the CME Group’s FedWatch tool, it seems very likely that the central bank will maintain interest rates in the range of 4.25%-4.50%, despite former President Donald Trump’s continuous calls for lower borrowing costs.
The upcoming decision appears straightforward, directing traders’ attention toward the interest rate dot plot, which represents each Fed official’s expectations for future interest rates. A cautious outlook with fewer than two projected cuts could reinforce the ‘higher-for-longer’ narrative, while a dovish surprise might provide relief for the dollar and potentially invigorate crypto bid activity. Until then, patience governs the market, state the crypto trading firm XBTO.
Expectations for rate cuts in 2025 have already been substantially revised down from an anticipated 100 basis points to just 50, driven by a stable labor market and inflation tracking above the 2% target. Further geopolitical tensions, particularly in the Middle East, could further temper expected cuts to 25 basis points, cautioned Matteo Greco, Senior Analyst at Fineqia, in an email.
Despite the Fed’s potential hawkish stance resulting in downside volatility for Bitcoin, it’s likely to exacerbate the U.S. fiscal landscape by increasing debt costs, thereby enhancing the appeal of traditional assets like gold and Bitcoin.
