21 April, 2024

Crypto Market Braces for Federal Reserve’s Rate Decision: What Experts Say

20 Sep, 2023

28 Nov, 2023

  • The Federal Reserve is expected to maintain the current benchmark borrowing rate between 5.25% and 5.5%, aligning with broader market sentiment.
  • Bitcoin options expiring this Friday suggest that significant price movements are unlikely, adding another layer to market expectations.
  • Experts like Ruslan Lienkha and Lucas Kiely suggest that the Federal Reserve’s decision could indicate a pause in rate hikes.

The crypto market is on high alert as it anticipates the Federal Reserve’s rate decision, scheduled for Wednesday at 14:00 ET. Since March 2022, the Federal Reserve has been on a rate-hiking spree, elevating the federal funds rate from an initial 0.5% to 5.5% by July. 

For the upcoming decision, the central bank is widely expected to hold the benchmark borrowing rate steady, ranging between 5.25% and 5.5%. This perspective aligns with the broader market sentiment, which does not foresee the Federal Reserve’s decision as a significant market-moving event for Bitcoin.

Ruslan Lienkha, a prominent figure in a Web3 platform, echoed this sentiment, suggesting that the Federal Reserve aims to maintain a delicate balance between averting a potential recession and controlling high inflation. Lucas Kiely, an executive at a digital wealth platform, further elaborated that a pause in rate hikes could signal the end of economic adjustments initiated since the onset of the pandemic.

Adding another layer to the discussion, James Butterfill, the head of research at crypto asset manager Coinshares, pointed out that Federal Reserve Chair Jerome Powell’s press conference could subtly influence the crypto market. Depending on whether Powell’s comments lean dovish or hawkish, Bitcoin prices could see corresponding movements.

Moreover, traders are also closely watching Bitcoin options that are set to expire on September 22. These options, which also take into account the Federal Reserve and the Bank of Japan’s meetings, suggest that significant price movements for Bitcoin are unlikely. 

According to Markus Thielen, head of research and strategy at crypto services provider Matrixport, Bitcoin options market pricing indicated a mere 2.8% movement in BTC prices this Friday. This point adds another layer of context to market expectations surrounding the Federal Reserve’s upcoming rate decision.

Jeff Feng, co-founder of a tech lab, reminded market participants that the crypto market’s behavior is not solely dictated by central bank policies. Given the volatile nature of cryptocurrencies, Feng advises caution, particularly during significant financial events like the Federal Open Market Committee meetings.

The Federal Reserve has been very adamant about remaining ‘data dependent‘ and signaling the ability to ‘hold rates higher for longer,’ according to Greg Magadini, director of derivatives at Amberdata. According to him, this could mean that the Federal Reserve can navigate this week’s FOMC meeting by keeping rates unchanged but signaling that rates will remain elevated while they monitor economic releases.



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