The price of major cryptocurrencies could rise sharply this week if the United States Federal Reserve gives any signal that could suggest a slowdown in the pace of rate hikes this year.
There are expectations from investors for a possible rally in the markets in the coming days, as a result of the announcement of a change in the base rates by the Federal Reserve on Wednesday.
This expectation is shared by both institutional players such as investment banks, but also by members of the crypto community. However, opinions still differ on the form this gathering will take and on the exact conditions necessary for its realization.
Analysts expect the Fed to raise rates by 75 basis points this week, but economists are unsure what will happen at the Federal Reserve’s next meeting in December. Expectations for a 75 basis point hike at this week’s meeting are also shared by the market, with the CME exchange’s FedWatch tool currently showing an 86% chance of the Fed raising rates by 75 basis points.
Note that the tool also shows a 14% chance of a key rate hike of just 50 basis points, which would trigger a rally across the crypto market.
According to one communicate from investment bank Merrill Lynch, discussions about a possible slowdown in rate hikes from December are already underway within the Fed. The bank does expect Fed Chairman Jerome Powell to speak soon about the content of those discussions, which would open the door to a 50-basis rate hike in December.
Similarly, Goldman Sachs, another prominent Wall Street bank, said in a bulletin that it also estimates a 75 basis point hike this week, followed by a likely 50 basis point hike in December. .
“We expect the FOMC to further tighten this slowdown to 50 basis points in December, with policy rates on the rise for the end of the year. We add another 25 basis points increase to our forecast, which now shows increases of 75 basis points in November, 50 basis points in December, 25 basis points in February and 25 basis points in March. »
Will Powell’s comments spark a rally in the crypto market?
The question now is whether Powell’s comments about a possible rate hike slowdown starting in December will be enough to get the crypto market back on track after several months of a downtrend.
On Twitter, a large number of users are hoping for this scenario to happen, and some are quick to claim that the price of Bitcoin will explode once the Fed makes its announcement on Wednesday.
Others like Alex Krûger, a popular crypto trader and economist on Twitter, say they think it’s not just Bitcoin’s price that will skyrocket this week from the Fed’s announcements, but Ethereum’s as well.
However, it is impossible to predict exactly how this week will develop in the markets. But with the surprises of the last few weeks, especially regarding the rise of Bitcoin from $19,000 to $21,000, the words of enthusiastic and Bulgarian investors are becoming more credible.
Is Bitcoin’s price advance an early signal of a future Fed pivot? Wednesday’s announcement will answer that question.