Cetoex News – The year 2023 began on a positive note for the cryptocurrency market. Bitcoin (BTC) rallied by more than 40%, and other projects followed suit. However, many worry that the recent rally could see a pullback after the Federal Reserve’s FOMC meeting on Wednesday, Feb. 1. The cryptocurrency markets have already begun reacting to speculation as assets dip. Bitcoin (BTC) witnessed its most significant dip since November when the popular exchange, FTX, fell.
Later today, the Fed will start its two-day FOMC (Federal Open Market Committee) meeting. On Wednesday at 19:00 UTC, it will make its interest rate decision. At 19:30 UTC, Fed Chair Jerome Powell will hold a news conference after the rate decision. Analysts predict Powell will adhere to his hawkish script at the press conference following the meeting on Wednesday.
The CME estimates that there is a 99.9% chance that interest rates will increase by 25 basis points (4.5% to 4.75%). In other words, a 25 basis point rate increase is already priced in. Furthermore, interest rate futures indicate that the Fed’s run of rate increases may come to a stop in June. The cryptocurrency market’s anticipation of an early shift toward easing will be boosted if Powell recognizes the recent drop in inflation and economic growth.
Will the cryptocurrency market take another hit?
Inflation in the United States has started to decline. According to the CPI, the rate decreased in December to 6.5% on an annual basis. To put things in perspective, inflation was 7.1% in November and 9.1% in June 2022. President of the Philadelphia Fed, Patrick Harker, stressed in a recent address that moving forward, increases of 25 basis points will be reasonable.
Investors will be paying close attention to Chair Powell’s remarks about the strength of the economy, the employment market, the macro recovery, and more. In addition to the interest rate increase, a short-term increase might be anticipated to occur if he suggests future softening actions.
A brief boost brought on by hype might support the growth of the cryptocurrency markets if the Fed performs as predicted. A retreat might be anticipated if markets believe the announcement to be hawkish. Results, though, will rely on Powell’s Wednesday announcement.
NEWS BY – CETOEX NEWS