The price of major cryptocurrencies could rise sharply this week if the US Federal Reserve gives any signals that could suggest a slowdown in the pace of rate hikes this year.
Investors expect a potential bullish rally in the markets in the coming days following the announcement of a change in policy rates by the Federal Reserve on Wednesday.
This expectation is shared both by institutional actors such as investment banks, but also by members of the crypto community. However, opinions still differ on the form this rally will take and on the exact conditions necessary for its realization.
Analysts expect the Fed to raise rates by 75 basis points this week, but economists aren’t sure what will happen at the next Federal Reserve meeting in December. The expectation of a 75bp hike at this week’s meeting is also shared by the market, with exchange CME’s FedWatch tool currently indicating an 86% chance that the Fed will raise rates by 75 points.
Note that the tool also indicates a 14% probability for a key rate hike of just 50 basis points, which would still cause a rally in the entire cryptocurrency market.
According to a statement by the investment bank Merrill Lynch, discussions have already been held within the Fed on a possible slowdown in rate hikes since December. The bank expects to see Fed chairman Jerome Powell talk about the content of these discussions, which would open the door to a 50-point hike for December.
Similarly, Goldman Sachs, another well-known Wall Street bank, said via a newsletter that it also estimates there will be a 75bp hike this week, likely followed by a 50bp hike in December.
“We expect the FOMC to further set this slowdown at 50 basis points in December, with policy rates rising by the end of the year. Let’s add another 25 basis point increase to our forecasts, which now indicate increases of 75 basis points in November, 50 basis points in December, 25 basis points in February and 25 basis points in March. “
Will Powell’s Comments Cause a Rally in the Cryptocurrency Market?
The question now is whether Powell’s comments on a possible slowdown in rate hikes starting in December will be enough to get the cryptocurrency market back on track after several months of downtrend.
On Twitter, a large number of users are hoping for this scenario to come true and some don’t hesitate to say that the price of Bitcoin will explode as soon as the Fed makes its announcement this Wednesday.
Others like Alex Krûger, a cryptocurrency trader and famous Twitter economist, say they think it will not only be the price of Bitcoin that will skyrocket this week on Fed announcements, but Ethereum’s as well.
However, it is impossible to predict exactly how the markets will develop this week. But with the surprises of the past few weeks, particularly regarding Bitcoin’s rise from $ 19,000 to $ 21,000, the words of enthusiastic and bullish investors are becoming more credible.
Is Bitcoin Price Advance an Early Sign of a Fed Pivotal Future? Wednesday’s announcement will answer that question.