FOMC Bitcoin Impact? Crypto markets are watching Donald Trump and Jerome Powell. Will BTC spike after pivotal FOMC meeting on January 29?
In November last year, Donald Trump said his administration would look into lowering interest rates even further, easing the burden on consumers.
Since then, the Federal Reserve not only slowed on interest rate cuts but also hinted that in 2025, they will not ease as fast as expected.
This was bearish for the crypto and equities markets. Even though prices fell on these comments, bulls quickly scooped up more coins, taking advantage of the discounts then available.
Now, on January 29, all eyes will be on the central bank and the FOMC. As usual, the stakes couldn’t be higher, and the Fed is expected to surprise the markets.
With Trump in office, his czars would prefer lower rates to stimulate economic growth. However, whether the Fed will be hawkish (tighten) or dovish (lower) depends on economic data and its performance. Of importance, there are inflation, GDP growth, and labor market factors for consideration.
Eyes On the Federal Reserve: Will They Raise Or Slash Rates?
Given Trump’s ambitions in the next four years, the world is closely watching the Fed. The president wants to re-introduce tariffs, slash corporate taxes, and basically create a favorable environment for American companies to thrive.
These expectations increased bond yields, reaching above 4.50% earlier this month. Economists expect domestic productivity to grow, pushing inflation even higher.
Morgan Stanley reportedly predicts the central bank will hold rates steady in the next meeting. The global bank also expects the central bank to shift its position on the labor markets from “cooling” to “stable.”
Over the last six months, the economy has been creating more jobs and seems healthier than it was earlier.
Subsequently, the chair, Jerome Powell, may also choose to maintain that the central bank will be data-dependent, tracking the labor markets and inflation. He could even signal openness to slash rates come March 2024.
Overall, the Fed will be careful in its messaging, maintaining a cautious tone while being optimistic, factoring in all the uncertainties surrounding the economy. Even so, their primary goal will be to keep inflation down toward the 2% benchmark rate.
Will Bitcoin Price Soar After FOMC?
How the crypto market reacts will depend on whether the Fed holds or slashes rates on January 29.
If the central bank unexpectedly slashes rates, Bitcoin
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will pump harder as capital flows to speculative assets and equities. In this event, it will be easy for Bitcoin to crack $110,000 and later $120,000.
(BTCUSDT)
Conversely, if the bank holds rates and becomes hawkish, reducing their interest rates projection, BTC could dump below $100,000, even tanking below $90,000.
In that event, capital will easily flow back to treasuries whose yields have risen in recent weeks.
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