As we approach the Federal Open Market Committee’s (FOMC) scheduled meeting for March 20, 2019, the Bitcoin market and other crypto markets are experiencing an extreme downtrend. BTC has dropped by roughly -10% during the last 2 days. Ethereum (ETH) also fell -12%.
In the aftermath of unexpected economic developments, the Fed has been under pressure to announce its interest rate stance. spikes in the US Consumer Price Index The Producer Price Index and Consumer Price Index, which are both based on the Producer Price Index (PPI), have caused volatility in all markets including digital assets.
CME FedWatch predicts that the interest rate will remain stable. The tool gives a probability of 99%. The Fed’s “dot plot” is an illustrative representation of each member’s expectations about future interest rates. This could be a key indicator for monetary policies in the months to come.
Anna Wong is the Chief US Economist at Bloomberg. She commented via X. “Another reason why FOMC [is] not ready to cut: members not yet of broad agreement of that need. Here’s visualizing the dispersion of FOMC views with the help of our new weekly NLP Fed spectrometer. “
Members are not in agreement on the need for a cut. Our new NLP Fed weekly spectrometer helps visualize the FOMC’s views. (Interactive version at @TheTerminal BECO models —> Fedspeak —> spectrometer) pic.twitter.com/Kney89BERM
— Anna Wong (@AnnaEconomist) March 19, 2024
How will Bitcoin and Crypto react?
Ted, a macro analyst, explains his view on X and highlights the complex relationship that exists between the current crypto market conditions and macroeconomic trends. Ted clarified that particular spot Bitcoin ETF flows The macro-factors have made a comeback.
The following is a list of the most popular ways to get in touch with someone. stated X “If BTC is to be considered digital gold, it’s expected to mirror gold’s market movements, albeit with a higher degree of volatility. In the current climate, with the market bracing for the Fed’s upcoming meeting, macroeconomic factors momentarily take precedence, driven by recent developments in PPI and CPI figures.”
Further, he speculated that “despite the eventual remarks of [Fed Chair] Powell has been adopted by the market. hawkish stance in anticipation of a ‘higher for longer’ interest rate scenario.”
Michaël van de Poppe, a noted figure in the crypto analysis domain, provided His insights on recent price declines of Bitcoin through X. Citing a variety of factors, including anticipation of the FOMC Meeting and large capital outflows Grayscale‘s Bitcoin Trust. Van de Poppe advises, “It’s typically in these pre-FOMC periods, perceived as risk-off intervals, that the savvy investor finds opportunities to ‘buy the dip’.”
Analyst @10delta reflects market sentiment changes on X pointed out Investors’ strategic positioning in anticipation of Fed rate decisions. “The market is currently pricing in a reversal to the November ’23 interest rate levels, a clear indication that investors are adjusting their expectations based on the Fed’s potential pivot signaled in the previous dot plot,” He made a note.
Accordingly, he argues that the FOMC & dot plot will be a “buy the news” As the expectations of the market are properly adjusted. “The macro worries […] should dissipate & crypto idiosyncratic bullish factors, such as the ETF inflows […] as well as the BTC halving take hold. All considered I think there’s a good R/R for ‘buying the dip’ heading into the March 20 event,” The analyst also added.
Goldman Sachs predicts only 3 rate cuts this year
Goldman Sachs Research has recently published a detailed report in its March FOMC preview. This report highlights the delicate balance that the Fed aims to strike between controlling inflation while supporting economic growth.
“Our revised forecast now anticipates three rate cuts in 2024, a slight adjustment from our previous prediction, primarily due to a modest uptick in the inflation trajectory,” Goldman Sachs analysts elaborated. The analysts speculated further. “While the immediate focus is on maintaining current rate levels, the trajectory for rate cuts will hinge on inflation dynamics and economic performance indicators.”
Goldman Sachs predicts the Fed to still aim for a June first reduction. “This combined with a default pace of one cut per quarter implies that the most natural outcome for the median dot is to remain unchanged at 3 cuts or 4.625% for 2024,” “The banking giant said.”
Goldman: While inflation is firmer, it still appears to be on course for an initial cut at the June FOMC Meeting. pic.twitter.com/0I1BPYiU8W
— Mike Zaccardi, CFA, CMT 🍖 (@MikeZaccardi) March 17, 2024
The crypto market is growing. financial The FOMC is expected to deliver a range of outcomes. There’s a cautious optimism in the air. Dot plots are used by the market to monitor the Fed’s comments for future indications on monetary policy.
Bitcoin and Crypto Market: Will there be a surprise? Or, did market participants get it right on their predictions? “higher for longer” Policy assumption
BTC, which was currently trading at $63,118, found support around the price of $62,400.
Featured Image from Shutterstock. Chart by TradingView.com
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