Ahead of the crucial Federal Open Market Committee meeting, a FedWatch tool made an important prediction about federal interest rate cuts. The prediction provides clarity on what we should expect after the scheduled FOMC meeting. Here we attempt to view the prediction from the perspective of a cryptocurrency investor. What does this prediction mean for cryptocurrency investors and traders? Curious? Read on!
Federal Open Market Committee Meeting: What You Should Know
Generally, the FOMC organizes meetings at least eight times a year. One such meeting is set to take place tomorrow. An FOMC meeting is an occasion for policymakers in the United States to evaluate the health of the US economy by considering several indicators like the CPI, GDP, and the unemployment rate. It is also an occasion for them to decide whether they need to make any changes in their policies to better the performance of the economy. Earlier, Federal Reserve Chairman Jerome Powell hinted that the administration might consider an interest rate cut. Considering that, the upcoming meeting is of extreme significance.
Looking at the FedWatch Tool, it is clear that there is a high chance of the execution of an interest rate cut in the United States. The tool predicts two prime possibilities. The first is the possibility of a 69% chance for the Federal Reserve to go forward with a 50 BPS interest rate cut. The second is the possibility of a 31% chance of moving ahead with a 25 BPS rate cut.
Impact on the Cryptocurrency Market
Generally, a Federal interest rate cut has a ripple effect on the crypto market. A cut makes traditional assets less lucrative, encouraging investors to choose riskier assets over traditional ones. Since the FedWatch tool suggests two possibilities, we should analyse the two separately, as the market is likely to behave differently in each situation.
First, let’s check what could happen if the cut is 50 BPS. This possibility is extremely favourable for the crypto market, as it might give a strong bullish momentum to the crypto market.
Secondly, let’s consider what could happen if the cut is just 25 BPS. While this is also favourable, in this situation, investors might behave a little bit cautiously compared to the first situation. In short, it might not provide a sudden boost to the crypto market.
In conclusion, the upcoming FOMC meeting is something that could decide the course of the Bitcoin market momentum. A rate cut could act as the impetus that the cryptocurrency market urgently requires if it hopes to rise up to popular expectations regarding its Q4 performance.
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