- Bitcoin’s price plunges 5.20% amidst anticipation of the FOMC meeting and the upcoming interest rate decision by the US Federal Reserve.
- There is a 96.9% likelihood of an interest rate cut in September according to market expectations.
- The Bitcoin price could surge to $67,600 or potentially revisit $70,000 following the FOMC meeting.
Bitcoin price volatility looms as traders await the FOMC decision, with potential significant impacts on the cryptocurrency market.
Anticipation around FOMC and Fed Interest Rate Decision
Bitcoin traders are bracing themselves as the Federal Open Market Committee (FOMC) and the US Federal Reserve’s interest rate decision draw near. Scheduled for Wednesday, the meeting could trigger significant price movements in the volatile crypto market. The interest rate decision is expected to be announced on July 31, 2024, at 18:00 GMT, followed by a two-day FOMC meeting.
Market Expectations and Probabilities
According to the FedWatch Tool, there is a 96.9% probability that the Federal Reserve will maintain the current interest rate range of 5.25% to 5.50%. Investors are also pricing in an 85.8% chance of a 25 basis point rate cut in September, with a smaller 13.9% possibility of a half-point cut. These expectations come amidst mixed economic indicators such as improving inflation and a cooling labor market.
Potential Impact on Bitcoin Prices
The Bitcoin market is likely to experience heightened volatility in response to the FOMC decision. Typically, Bitcoin prices react in two ways: an immediate spike in volatility based on how the actual data deviates from market expectations, and a longer-term effect influenced by Bitcoin’s technical factors. Following the announcement, Bitcoin prices could potentially climb to $67,600 in the short term. However, market dynamics and upcoming economic data releases, such as the Consumer Price Index (CPI) in mid-August, could influence further price movements.
FOMC’s Influence on Market Sentiment
The post-meeting statement from the FOMC will be crucial in shaping market sentiment. While the Fed is expected to maintain the current interest rate, any hints at future rate cuts or economic projections will be closely scrutinized. Market participants are particularly interested in whether the Fed will confirm the anticipated 25 basis point cuts in the upcoming months or temper these expectations, which could result in a spike in market volatility.
Potential Scenarios and Price Movement
Depending on the FOMC’s commentary, Bitcoin might experience a spike to $67,600, and possibly test previous highs around $70,000. On the other hand, if the market reacts negatively, Bitcoin could correct to the $63,047 key support level. A failure to hold this level might push BTC down to the previous support of $58,232, presenting a potential buying opportunity for long-term investors.
Conclusion
Bitcoin traders should prepare for significant price swings as the FOMC meeting approaches. The Federal Reserve’s interest rate decision, combined with the FOMC’s economic projections, will be pivotal in determining short- and long-term movements in Bitcoin’s price. Investors should monitor the outcomes closely and be ready for potential volatility in the crypto market.
