Here is How the Federal Reserve’s Anticipated Rate Cut Could Impact Crypto Markets
Although interest rate cuts have partly been the catalysts behind the ongoing Bitcoin rally, several analysts now say the anticipated rate cut later this week will not trigger a massive move.
The US Federal Reserve will hold its periodic Federal Open Market Committee (FOMC) meeting on Wednesday. Crypto enthusiasts expect the committee members to announce a 25-basis point interest rate cut, according to data from the CME FedWatch Tool, which shows a 95% chance. If the FOMC does meet the expectations of the majority, it would mark the second straight rate cut after last month’s reduction.
Why This Week’s Rate Cut May Not Fuel a Substantial Rally
GCash’s Head of Crypto, Lusi Buenaventura, says this week’s rate cut will not have a significant impact on crypto prices, arguing that market participants have been expecting the rate cut for several weeks now. He, however, expects Bitcoin to maintain the bullish momentum going into 2025. According to him, Bitcoin will remain above $100,000 over the next 14 days.
Similarly, Presto Labs’ research analyst Min Jung claims Bitcoin has already priced in the expected interest rate cut this week, so he does not expect aggressive price movements after the FOMC makes the announcement.
Traders Are No Longer Focusing on Monetary Policies, Analyst Claims
Jung says crypto traders are now more focused on adoption metrics and technical indicators than monetary policies. According to him, Bitcoin’s future price trend may depend on institutional adoption and market structure, not conventional monetary factors.
However, the rate of institutional crypto adoption depends on the Federal Reserve Chairman’s comments on future interest rate cuts. If Fed Chair Jerome Powell announces unexpected developments during his speech on Wednesday, then we may see the institutional adoption rate dropping, thus affecting Bitcoin’s price.
Bitcoin Records New All-Time High
Bitcoin has entered new levels ahead of the FOMC meeting. The largest digital currency by market cap crossed $104,193 earlier today, peaking at $106,392 following a 24-hour rally of 3.6%.
Bitcoin has surged since October after the Federal Reserve announced its first rate cut. But the rate cuts are not the only drivers of the rally. The re-election of pro-crypto candidate Donald Trump has played a massive role in thrusting Bitcoin to higher levels.
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