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The Fed is about to decide on rates: the crypto market is sweating!

Mon 29 Apr 2024 ▪ 4 min of reading ▪ by Mikaia A.
Getting informed Event

In just two days, on May 1st, the Federal Open Market Committee will meet to decide the fate of interest rates. As financial analysts fervently scrutinize the evolution of the bond markets in anticipation of this event, the crypto community is also holding its breath. Indeed, there is fear that bitcoin and other altcoins might succumb to the pressure.

Bureau de la FED sur des montagnes, pièce de bitcoin

Crucial Fed Decisions in Sight

Since June 2023, Jerome Powell had anticipated that the benchmark interest rates of the US Federal Reserve would remain high for “several years”. Based on the lack of improvement in the inflationary situation, the Fed Chairman has left doubts about a possible downward revision of rates. Uncertainty which weighs heavily on bitcoin and other cryptos, subjected to constant pressure.

This week, the United States is gearing up for economically significant events, with the highly anticipated Federal Reserve interest rate decision at the top of the list. Eyes are fixed on this deadline, as crypto analysts predict it is almost certain that the Fed will maintain rates at their current level, with a 95.6% probability. A decision that could play a crucial role in the future direction of the global economy, highlights CoinGape.

However, dark clouds are gathering on the horizon. Recent US economic data has cast a veil of uncertainty, with a GDP below expectations, pointing towards a possible economic slowdown. Meanwhile, the figures for the benchmark PCE index have revealed persistent inflation, raising delicate questions for the Fed.

While some fear the possibility of stagflation, characterized by anemic economic growth and high inflation, these concerns remain speculative for the time being. Nonetheless, the market is reacting to this uncertainty, with revised expectations now only foreseeing one interest rate cut by 2024, in stark contrast to the initial more optimistic projections.

In the meantime, in the cryptocurrency front, volatility is the order of the day. Bitcoin recorded a new correction of 2.2% last weekend, while altcoins were subjected to even more intense selling pressure, with the top ten alternative cryptos (ETH, TON, BNB, ADA, SOL, etc.) experiencing corrections of up to 10%.

Bitcoin and Altcoins Under Pressure

The recent crypto market update has shown signs of compressed bitcoin volatility, moving from 70% to 50%. Parallelly, fears of further delays concerning Ethereum ETFs loom large. This atmosphere of uncertainty raises a burning question: is this a trend shift or merely a pause?

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Attention turns to Hong Kong where Bitcoin and Ethereum ETF transactions will begin soon. A palpable anticipation envelops crypto market players, who hope to see an opening for Asian institutional capital.

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Mikaia A. avatar
Mikaia A.

La révolution blockchain et crypto est en marche ! Et le jour où les impacts se feront ressentir sur l’économie la plus vulnérable de ce Monde, contre toute espérance, je dirai que j’y étais pour quelque chose

DISCLAIMER

The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.