Over the past several months, the same story has been repeated over and over again. The Fed takes note of the evolution of inflation in the American economy and then passes it on through its key interest rates. During the day, the US central bank will communicate its next rate hike. Meanwhile, Bitcoin and the crypto market are patient.
Bitcoin and the crypto market suspended on the FED’s decision!
After last week’s rise, Bitcoin continues to hold above the symbolic $20,000 threshold, until today’s expected Fed monetary policy decision.
Yesterday, Bitcoin and the main altcoins continued to trade in close line with the stock market trends. If we consider the last 24 hours, the crypto market is very sensible, as if hanging on the size of the rate hike that will be announced. Bitcoin falls 0.49% and Ethereum retreats 1.10% in a weak weak market (-1.15%). For once, the Fed should play the role of justice of the peace in the markets.
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Towards a 75 basis point hike?
Currently, US central bank interest rates are 300 – 325 basis points. To continue to contain inflation, they would have to increase further.
If we are going to trust the expectations of the market players, they are for the most part considered that the central bank of America will increase its interest rates by 75 basis points. 12.5% believe the increase will be only 50 basis points.
While it is interesting to analyze these figures in static terms, the dynamic evolution is just as interesting. A week ago, only 7.5% of economic agents expected an increase of 50 basis points. The hypothesis of a reduction in the rate hike appears to be progressing. But at this point, most market players are counting on December or early 2023 to see a slowdown in the rise.
Note that on November 10, the markets are awaiting the publication of October figures on US inflation. When the September figures were released, inflation fell over a rolling 12 months for the fourth month in a row. But it remained strong, at 8.2%. Therefore, the publication of the October figures could have an impact on the Fed’s rate hikes in the future.
The Dogecoin comes off the market!
Since the final confirmation of Elon Musk’s takeover of Twitter, the price of Dogecoin has been steadily rising. In the last 7 days, the DOGE has increased by 107%. Yesterday morning, the asset even flirted with the $0.16 threshold. At the time of writing these few lines, the DOGE token is trading at $0.1385.
However, if the Fed were to announce a mere 50 basis point increase, the meme signal should also have a degree of euphoria.