The price of Bitcoin has reached record highs this month as investors adjust to the upcoming presidency of Donald Trump. However, markets are now waiting for the Federal Reserve minutes on Tuesday to see if the U.S. central bank’s easing campaign will continue at the same pace. Earlier this month, the Fed lowered its benchmark interest rate by a quarter of a percentage point, following a larger cut of half a percentage point in September.
While these cuts have supported risk assets, investors are unsure if a third cut will take place. Fed futures traders currently see a 43% chance that the Fed will maintain current rates at their final meeting of the year, ending on December 18. Lower interest rates generally benefit risk assets like stocks and cryptocurrencies, as they make these investments more attractive compared to other options.
However, analysts suggest that the Fed might adopt a more cautious approach, especially considering the uncertainty surrounding Trump’s proposed tariffs. Fed Chair Jerome Powell mentioned that the central bank’s progress on lowering inflation to its target of 2% has been solid, but it is not yet there.
Inflation is expected to continue cooling, but it could face some challenges along the way. The Fed’s latest policy meeting took place after the election and Tuesday’s meeting minutes could provide insight into the Fed’s thoughts on potential policy actions in response to Trump’s victory. In addition, on Wednesday, the U.S.
Commerce Department will release the personal consumption expenditures (PCE) price index, which measures inflation in October. The Fed’s preferred inflation gauge is expected to show a 0.3% increase in prices for that month, following a 2.1% increase in the year ending September. Analyst Valentin Fournier believes that a softer inflation print could boost Bitcoin’s momentum and improve its chances of surpassing the $100,000 resistance level.
Meanwhile, analysts at QCP have observed that Bitcoin and Ethereum futures traders are shifting towards puts over calls, favoring bearish bets based on the assets’ implied volatility. Depending on the outcome of the Fed’s meeting minutes and the PCE print, this could lead to a decrease in crypto prices as the market takes a breather.
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