Bitcoin expected to see high volatility today with Fed rate announcement

The Fed will release the interest rate decision at 2:00 p.m. New York time.

The bitcoin market is influenced by the Fed's moves.

The forecast is for rates in the United States to drop to 5.25%.

A larger than expected rate cut could be bearish for the markets, according to analysts.

A day that has been expected by the markets, including the bitcoin (BTC) and cryptocurrency markets, has arrived. Today the FOMC interest rate decision will be published, the body in charge of the monetary policy of the Federal Reserve (Fed), the United States Central Bank.

The announcement will be at 2:00 p.m. New York time, which to put it in perspective is equivalent to 3:00 p.m. in Buenos Aires and 8:00 p.m. in Madrid. Half an hour later, Jerome Powell, the president of the Fed, will give a speech to explain the decision.

The forecast is that interest rates will fall by 0.25% to 5.25%, starting a phase of cuts. For more than a year, these have been fixed at 5.5%, their highest level in two decades, as seen below.

We expect the expected rate cuts to have a considerable impact on the prices of digital assets,” said Javier García de la Torre, director of the Binance crypto-asset exchange in Spain and Portugal. The reason is that they imply a reduction in borrowing costs and an increase in liquidity, he explained.

In this sense, the exchange manager summarized that lower interest rates drive demand for higher-yield and riskier assets, such as crypto-assets. He exemplified that the price of bitcoin increased 375% between 2020 and 2021 when rates were close to zero.

The presence of spot ETFs could also ease transitions between equities and cryptocurrencies, allowing increased liquidity from rate cuts to flow into crypto markets, he said.