As well as the financial As markets prepare for the Federal Open Market Committee meeting (FOMC), which will take place on June 12th on the evening of that day, the Bitcoin community and the crypto-community are ready to evaluate the impact any Federal Reserve announcements may have on digital assets like Bitcoin. Investors are primarily interested in the Fed’s economic forecasts and forward guidance. The consensus is that the Federal Reserve would hold its federal funds rate at between 5.25%-5.50 percent.
Tomo @Market_Look, the crypto analyst shared his insights. insights On X, he framed the upcoming FOMC as a non event for those who expected drastic measures. He said, “Interest rates are likely to remain unchanged (5.25%-5.50%). There will likely not be any major changes to the statement or economic outlook, and the dot chart is expected to shift in a hawkish direction.”
Tomo has also noted the expected adjustments to the rates projections in the future years. “In 2024, the rate will shift from 3 cuts to 2 cuts. The hawkish surprise will be 1 cut.” He said that these adjustments have already been priced into the market, indicating minimal surprises and minimal market volatility.
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“As of March, the distribution of dots for 2024 is 9 people in favor of keeping interest rates unchanged or cutting them twice, and 10 people in favor of cutting interest rates three or more times… a shift from three to two is already factored in.”
James Knightley (CFA) and Padhraic G Garvey CFA are among the economists at ING, a banking giant. share They have a similarly conservative view of the Federal Reserve’s possible moves. It is anticipated that the Fed would emphasize its cautious stance Rate cuts could be further delayed due to high inflation rates and solid employment statistics.
The ING team explained their expectations. “The US Fed accepts that monetary policy is restrictive, but lingering inflation and strong jobs numbers mean it will indicate it’s prepared to wait longer before seriously considering interest rate cuts.”
It is expected that, in 2024, the projections for rate reductions will decrease from three down to one or possibly two.
Nick Timiraos, Wall Street Journal reporter, reports that JPMorgan and Citigroup retracted their prediction of a July rate cut following last Friday’s jobs report. The majority of economists on the sell-side and experts who monitor the Federal Reserve expect one or two rates reductions either in September or December this year.
After the jobs report last Friday, JPM and Citi have backed down on their call for a rate reduction in July.
Many professional Fed-watchers and economists on the sell side now predict that there will be one or even two rate cuts in this year’s September or December. pic.twitter.com/x9tUD06Pmi
— Nick Timiraos (@NickTimiraos) June 10, 2024
Bitcoin And Crypto: What Impact?
Bitcoin and other crypto assets have recently been highly sensitive to macroeconomic data. The anticipation of a dovish turn—particularly any hints of rate cuts—could weaken the dollar and bolster Bitcoin and other digital assets as alternative investments.
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A reaffirmation or less dovish position than anticipated could also strengthen the dollar, and put downward pressure on the crypto market. But the nuanced viewpoints of FOMC members as expressed in the economic projections and dot plot could give clues to the medium-term path of cryptocurrency. US monetary policyThe crypto market could be affected by the investor sentiment.
The US dollar could be strengthened if a hawkish tone is expressed, which would suggest fewer or later rate cuts. This might also put downward pressure Bitcoin and other cryptocurrency. Any dovish signal or any hint of a softening stance towards rate increases could also boost the crypto market.
The tone of the FOMC’s press conference will depend on the remarks made by Chair Jerome Powell. Participants in the market will be closely watching his remarks for changes of tone with regard to inflation, economic expansion, and future adjustments to monetary policies. These remarks may lead to a variety of outcomes. significant price movements Bitcoin and the crypto market.
A few hours before FOMC, US Consumer Price Index for May 2024 will play a crucial role. The Fed will use these data to make decisions and determine whether or not the current stance is still appropriate.
BTC was trading at $67.707 at the time of publication, down by -3.5% from yesterday’s $71,200 high.
Chart from TradingView.com, image from Shutterstock
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Source: www.newsbtc.com