#Bitcoin and altcoins are awaiting today's Fed interest rate decision. The cryptocurrency market is facing significant selling pressure as market sentiment shifts towards risk aversion ahead of the interest rate decision from the Federal Open Market Committee (FOMC) meeting. According to current data, the largest cryptocurrency, Bitcoin, is struggling to hold on above the $60,000 threshold, with a decline of over 5 percent.
What Will the Fed Do?
As it is known, there is a significant change in market expectations regarding the Fed's interest rate adjustment. At the beginning of the year, it was predicted that the Fed would make more than one interest rate cut throughout the year, but this prediction has changed and now the Fed is expected to make only a single interest rate cut until December.
Wall Street's leading banking institutions have different views on the timing of the Fed's first interest rate cut. While JPMorgan and Goldman Sachs predict that the first interest rate cut will be made in July, Wells Fargo predicts that it will be made in September. In contrast, Bank of America predicts that the first interest rate cut will not occur until December. Amid differing forecasts, some Fed policymakers are even raising the idea of a rate hike, further complicating the situation.
Analysts believe that strong inflation data will push the Fed to maintain a high interest rate environment for a long time, but there are concerns that this approach could potentially lead to stagflation and reduce GDP growth.
The Fed's interest rate decision will be announced today at 21:00 CET and according to CME FedWatch Tool's data, there is a 98.9 percent probability that the interest rate will be kept constant at 5.50 percent. After the interest rate decision is announced, all eyes will be on Fed Chairman Jerome Powell's press conference, which will start at 21.30 GMT.
What May Happen to Bitcoin and Altcoins After the Fed Interest Rate Decision
Financial advisor Kurt. S. Altrichter emphasized that the Fed is focusing on two scenarios. Accordingly, the Fed will either keep interest rates constant at current levels or reduce them. Altrichter evaluates that if interest rates are kept unchanged, stocks will rise with limited support. In the opposite scenario, if the Fed turns dovish, it predicts that US Treasury yields will fall and Bitcoin and altcoins will rise along with the S&P 500.
The cryptocurrency market is currently facing downward pressure, especially altcoins, amid growing concerns about the Fed's stance on interest rates ahead of the FOMC meeting. The rise in the US dollar index indicates a flight from risky assets, adding to uncertainty in the market. However, the medium and long-term outlook for the cryptocurrency market remains balanced, with short-term pressures finding balance with the expectation that assets such as Bitcoin and altcoins will outperform against the backdrop of high interest rates and persistent inflation.
