The cryptocurrency market is gearing up for a pivotal week, as speculation mounts over a possible 50 basis point rate cut by the US Federal Reserve. This is a critical juncture not only for the overall financial landscape but also for the crypto sphere, given the upcoming US FOMC interest-rate decision. Fed Chair Jerome Powell is slated to speak after the FOMC meeting, offering insights into the central bank’s future policy rate direction.
With all eyes on the September FOMC gathering, market participants are eagerly anticipating the outcome regarding policy rates. Recent subdued US CPI and PPI inflation data have fueled expectations of a half-point rate cut from the Fed at the meeting.
The optimistic outlook has generated a surge in broader financial markets, with US stocks registering their best performance since last November. Furthermore, Bitcoin surpassed the $60,000 milestone last week, signaling an increased appetite for risk among investors.
Market analysis from the CME FedWatch Tool indicates a 50% probability of a 50-basis point rate cut by the Fed, alongside expectations of a smaller 0.25% cut. Speculation also points towards a total policy rate reduction of 100 basis points over the course of the year, underpinning positive market sentiment.
In the aftermath of the FOMC decision, Fed Chair Jerome Powell is set to deliver a press conference. The crypto market will closely monitor his speech for signals regarding the central bank’s future monetary policy direction.
While a dovish stance from Powell is anticipated, any unexpected deviation could impact market sentiment. Recent recovery in Bitcoin and other major cryptocurrencies, following heightened rate cut expectations, could be jeopardized by hawkish rhetoric, potentially triggering a broad market sell-off.
Despite historical trends suggesting a bearish September for cryptocurrencies, current predictions point to a potential market upswing driven by easing policy rate expectations. Additionally, optimism for a bullish fourth quarter looms, hinting at a possible market rally in the near future.