🟡 Bitcoin Price Fluctuates Ahead of Fed Rate Decision
Bitcoin (BTC) dropped to $59,500 on Binance ahead of the Federal Open Market Committee (FOMC) meeting tomorrow. While market participants expected the Federal Reserve (Fed) to take a hawkish stance, expectations were formed that interest rates would remain unchanged.
According to the CME FedWatch Tool, only 4.4% of economists predict a rate cut for the first time in more than a decade; A dominant majority of 95.6% predicts that interest rates will remain stable in the range of 525-550 basis points.
According to the Kobeissi Letter, current market data shows the probability of a rate cut this year is 36%. Four months ago, the probability of current rates being maintained was only around 3%.
Expectations have changed to only one discount this year. Previously, the market was expecting a sub-market rate cut. Additionally, the probability of two or more rate cuts dropped to 31%.
🔺 Stagflation Risk
In this financial climate, the United States is struggling with the risks of stagflation, with inflation continuing and economic growth slowing.
GDP growth slowed to 1.6% in the first quarter of 2024, below the 2.2% expectation and the previous quarter's 3.4% growth. At the same time, the US Core PCE inflation index increased from 2.0% to 3.7%.
Fed Chairman Jerome Powell stated that the latest data did not make the Fed safer and pointed out that the process of regaining economic stability would take longer. He expressed his belief that current policies are sufficient to deal with the risks at hand and hinted at maintaining high interest rates without an increase.
In line with these economic uncertainties, Bitcoin's course fell below $62,000 due to renewed stagflation concerns at the beginning of the week.
There was a brief rally above $64,000 yesterday with the launch of spot Bitcoin and Ethereum ETFs in Hong Kong, but this momentum soon faded as investor wariness ahead of the Fed's critical decision.
