In Wednesday's FED meeting, a decision will be made regarding the policy interest rate. Almost all expectations suggest that there will be no change in the interest rate. Below, you can see the CME Group expectation survey and the results in the following graph.
The table below shows the expected interest rates for each meeting in 2024. As you can see in the table, there is no expectation of any interest rate cuts in May, June, and July. The first possible interest rate cut is expected to occur in September. Apart from the interest rate cut expected in September, no other interest rate cuts are anticipated in 2024.
Interest Rate Decision: How Will It Affect the Cryptocurrency Market?
Historically, interest rate decisions have influenced Bitcoin and altcoin prices. A decision to maintain or lower interest rates can lead to increased inflation concerns, prompting investors to seek alternative stores of value like Bitcoin. Conversely, a decision to raise rates may temporarily dampen enthusiasm for risk assets, including cryptocurrencies.
In 2023, significant declines in interest rates were anticipated for 2024. However, in the United States, economic data falling short of expectations delayed interest rate cuts. As a result of this delay, the anticipated upward movement in altcoins did not materialize.
A Worst-Case Scenario for Cryptocurrencies: Interest Rate Cuts Expected to Remain Delayed
If Federal Reserve Chairman Powell suggests that interest rates will remain at current levels for longer than anticipated and that interest rate cuts will be even further delayed, a deeper downturn in the cryptocurrency market is highly likely.
Good Scenario: We May Be Ready for Interest Rate Cuts
If Powell suggests that there's no need to delay interest rate cuts much longer and states, "We may plan to cut interest rates more aggressively later this year," it would be quite positive for the cryptocurrency market.
