Bitcoin and Crypto Investors, What Should You Expect from Tomorrow’s FED Interest Meeting?

• On Wednesday, July 26th, at 18:00 UTC, FOMC will announce its interest rate decision. Traditionally, Fed Chairman Jerome Powell will address the media 30 minutes after the announcement.
• Over the past 16 months, the US Federal Reserve has raised interest rates to unprecedented levels while combating inflation. However, all signs indicate that the tightening cycle is likely to come to an end.
• In June, Fed Chairman Jerome Powell hinted at the possibility of further interest rate hikes this year, and some committee members advocated for two more increases. The market is now eagerly awaiting the outcome of this meeting.

FED’s critical interest rate decision will be announced tomorrow; Fed Chairman Jerome Powell’s statements after the interest rate decision could be critical.

FED’s Interest Rate Decision to be Announced Tomorrow

As the highly anticipated Federal Open Market Committee (FOMC) meeting approaches, the financial world is filled with speculation about the possible effects on Bitcoin and cryptocurrency. Tomorrow, on Wednesday, July 26th, at 21:00 (18:00 UTC), FOMC will announce its interest rate decision. Traditionally, Federal Reserve (Fed) Chairman Jerome Powell will address the media 30 minutes after the announcement.

According to CME FedWatch, the majority of the market expects a 25 basis point increase (99.8%). However, the real curiosity lies in what will follow this step and whether it will indicate the end of the interest rate hike cycle. After tomorrow’s decision, the market expects the Fed to keep its main interest rate high for a long time. The first interest rate cut could come as early as March 2024, maybe in May.

Over the past 16 months, the US Federal Reserve has raised interest rates to unprecedented levels while combating inflation. However, all signs indicate that the tightening cycle is likely to come to an end. The market firmly expects that the 25 basis point increase in the range of 5.25 – 5.5% will be the last one.

Meanwhile, Bitcoin and cryptocurrency have experienced a period of relative immunity from macroeconomic events and speculation about interest rate hikes in the first seven months of the year. However, investors should be aware that such conditions may not persist indefinitely.

On Monday, the price of Bitcoin dropped to the $29,000 support level. Market participants were cautious as the July FOMC meeting approached, as they were aware of its potential significant impact.

Powell Indicates the Possibility of 2 Interest Rate Hikes This Year

In June, Fed Chairman Jerome Powell hinted at the possibility of further interest rate hikes this year, and some committee members advocated for two more increases. The market is now eagerly awaiting the outcome of this meeting to determine the central bank’s future policy stance.

However, factors such as declining inflation and a weakening labor market in the US strengthen market expectations. Previous high inflation that led to the tightening cycle indicates a decline. June Consumer Price Index data revealed that inflation dropped to 3%.

Core inflation decreased from 5.3% in May to 4.8% in June. Both declines were stronger than previously anticipated. Remarkably, the core rate is currently trading below the level of the US federal funds rate, which has been quite rare in the past 20 years.

The long-standing strength of the US labor market has been the biggest headache for the Federal Reserve due to the imbalance between supply and demand. As it approaches balance, job creation numbers have decreased. There are even early signs indicating a decrease in consumer spending.

So, what does all this mean for Bitcoin and cryptocurrency investors? As always, it is important to approach the market with a balanced perspective. While BTC and cryptocurrencies have shown resilience against traditional economic events, they are not completely isolated from larger macroeconomic trends.

Investors should closely monitor the FOMC’s interest rate decision and Jerome Powell’s subsequent statements. Any signal regarding the future interest rate hike cycle could have implications for both traditional and Bitcoin and cryptocurrency markets and could lead to further selling.