Bitcoin and Altcoins Come Under Pressure Ahead of Fed’s Interest Rate Decision on May 1

Highlights

95.6% probability suggests that the Fed will keep interest rates unchanged on May 1.
Weaker-than-expected GDP data shows major slowdown in the economy.
Bitcoin volatility compression hints at chances of further price correction ahead.

Over the last weekend, the broader cryptocurrency market continued to remain under pressure. The Bitcoin price faced an additional 2.2% correction falling under $62,500. On the other hand, the altcoin space has faced even more selling pressure with the top ten altcoins correcting anywhere between 4-10%.

Fed Interest Rate Decision on May 1

This week brings key economic events for the United States, starting with the Federal Reserve’s highly anticipated interest rate decision scheduled for May 1. Analysts predict a 95.6% probability that the Fed will maintain interest rates at their current levels. Additionally, on May 3, the U.S. will unveil the April unemployment rate. Expectations for a U.S. interest rate reduction this year have dwindled to just one.

However, concerning data from the U.S. has emerged this week. A weaker-than-expected GDP print suggests a slowdown in the economy, while higher Core PCE figures signal persistent inflation issues, posing challenges for the Federal Reserve.

While there are worries that the U.S. may enter a stagflation scenario characterized by negative GDP growth and high inflation, this remains speculative at present. Market sentiment has shifted accordingly, with expectations now pricing in only one interest rate cut for 2024. This contrasts sharply with initial forecasts of seven cuts at the year’s outset and three in March.

What’s Ahead for Bitcoin and Altcoins?

In the recent market update, Bitcoin (BTC) volatility experienced a significant compression, dropping from 70% to 50%. Concurrently, the downside skew in Ethereum (ETH) risk reversals has intensified to -13% in the front-end, suggesting potential doubts regarding further delays in the SEC’s approval of spot Ether ETFs.

This development prompts the question: has the market sentiment shifted, or is this merely a brief pause within a broader bullish trend? Amidst these uncertainties, attention turns to a potential positive catalyst on the horizon: the commencement of trading for Hong Kong Bitcoin and Ethereum spot ETFs next week.

Anticipation is mounting as market participants eye this event as a potential gateway for the influx of Asian institutional capital into the crypto space.

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Bhushan Akolkar

Bhushan is a seasoned crypto writer with over eight years of experience spanning more than 10,000 contributions across multiple platforms like CoinGape, CoinSpeaker, Bitcoinist, Crypto News Flash, and others. Being a Fintech enthusiast, he loves reporting across Crypto, Blockchain, DeFi, Global Macros with a keen understanding in financial markets.   He is committed to continuous learning and stays motivated by sharing the knowledge he acquires. In his free time, Bhushan enjoys reading thriller fiction novels and occasionally explores his culinary skills. Bhushan has a bachelors degree in electronics engineering, however, his interest in finance and economics drives him to crypto and blockchain.

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