Crypto markets might rally before and after the Fed’s interest rate announcement, but there are different opinions on how that might occur. Many wonder whether Powell’s comments about a slowdown in rate hikes will cause the prices of cryptocurrencies to rise.
If the US Federal Reserve (Fed) suggests reducing rate hikes by late 2022, leading cryptocurrencies might rise significantly in the coming days.
Investment banks and crypto community members expect markets to rally before and after the Fed’s interest rate announcement. However, there are different opinions on the characteristics of that recovery and the requirements for it to occur.
Many analysts expect the Fed to raise rates by 75 basis points but are uncertain about what will happen in its next meeting. The market shares that expectation, which the CME FedWatch Tool estimates at an 86% chance of occurring.
According to the tool, there is also a 14% chance that rates will rise by 50 basis points, starting a rally in the crypto market.
The leading investment bank Merrill Lynch said the Fed might have discussed the reduction of rate hikes since December. The institution expects Jerome Powell, the chairman of the Fed, to report those debates, which might lead to a 50 basis point hike in December.
Goldman Sachs, another leading Wall Street bank, believes a 75bps hike may occur before a 50bps hike in December.
The bank expects the FOMC to match that slowdown to 50 basis points, with a slightly higher expected maximum fund rate. In addition, they predict another 25bp hike, which suggests 75bps in November, 50bps in December, 25bps in February, and 25bps in March.
The Comments from Jerome Powell Might Drive Cryptocurrencies Higher
Nobody knows whether Powell’s comments about a slowdown in rate hikes since December will allow cryptocurrencies and other risk assets to rally.
Some Twitter users expect that to happen, claiming that Bitcoin (BTC) will skyrocket when the Fed makes its announcement.
Alex Krüger, a renowned economist and cryptocurrency trader, believes that Bitcoin and Ether (ETH) will rise after the announcement. He thinks the bulls might be right after the surprise rally taking Bitcoin from around USD 19,000 to USD 21,000.
Bitcoin Might Rise in November If the Bulls Maintain the Upward Trend
Following some turbulent days, the overall crypto market has stabilized over the last 24 hours, achieving a 0.58% increase in market capitalization.
Despite a drop in the US markets, the price of Bitcoin remained stable in recent days. The value of Bitcoin was at USD 20,700, slightly below its previous peak of around USD 21,090.
Cryptocurrency analyst DonAlt warned Bitcoin holders that the recent increase might have been the last step before a more significant correction. In a new strategy session, he said the support near the USD 18,000 mark might not hold if the bulls cannot maintain the upward trend.
According to the analyst, the bulls may dismiss his analysis, driving the pioneering cryptocurrency higher by 40% even if a correction emerges. Since he considers the goal high, he said it could target USD 29,000 if that change remained.
By Alexander Salazar
