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Highlights
- Bitcoin price crashes 5.20% ahead of FOMC and interest rate decision.
- Investors can expect a 96.9% chance of rate cuts in September.
- Bitcoin price may spike to $67,600 or revisit $70,000 after FOMC meeting.
Bitcoin price has crashed 5.20% since July 29 and trades around $66,400. With the upcoming US Federal Reserve’s (FED) interest rate decision and Federal Open Market Committee (FOMC) scheduled for Wednesday, investors can expect heightened volatility in crypto markets.
The Interest Rate decision is scheduled for Wednesday, July 31, 2024, at 18:00 GMT. Following this, the FOMC will hold a two-day meeting.
Read more: BTC Whale Bags $388M BTC Ahead US Fed Rate Decision
Fed Interest Rates & FOMC Outlook
Based on the FedWatch Tool, there is a 96.9% chance that the Fed will maintain the current interest rate range of 5.25% to 5.50%. This decision comes amid mixed economic signals, including improving inflation and a cooling labor market. The market expects an 85.8% probability of a quarter-point (25 basis point) rate cut in September, with a 13.9% chance of a half-point cut.
The wording of the FOMC’s post-meeting statement will be crucial to determining its effects on the traditional or crypto markets. The Fed is unlikely to change its stance of waiting for data to make decisions.
Based on the FedWatch Tool, the market expects a steady 25 basis point rate cut every month, starting September. The Fed could temper this expectation, leading to a spike in volatility across markets.
Additionally, the Consumer Price Index (CPI) data is set to be released in mid-August and could also impact the markets, including Bitcoin price.
The Fed’s updated economic projections may reflect fewer anticipated rate cuts for 2024 than previously expected. However, the Fed is likely to adopt a balanced approach to avoid premature easing while addressing inflation concerns.
While today’s decision is expected to maintain the status quo, the Fed’s commentary will be pivotal in shaping market expectations for the coming months.
How Bitcoin Price Reacts To FOMC
Bitcoin price reacts to the Interest Rate decision or FOMC in two ways:
- An immediate spike in volatility governed by how far the actual data deviated from the market expectations.
- A steady long-term effect that is also dependent on BTC’s technical aspects.
The chart below shows that certain FOMC and CPI events have market local bottoms, while others have marked local tops. But here’s what to expect from Bitcoin price after today’s Interest Rate decision and FOMC.
A short-term volatility spike following the interest rate decision and FOMC meeting could push Bitcoin price to $67,600, which could eventually be undone over the next day or two. Between August 1 and 14, Bitcoin price forecast suggests BTC could continue to climb higher and revisit $70,000 or all-time high levels to collect the sell-side liquidity formed above the lower highs formed since mid-March 2024.
However, if history repeats, the CPI announcement on August 14, BTC could lead to local top formation for BTC.
In such a case, investors can expect BTC to correct the $63,047 key support level. A breakdown of this level could send the pioneer crypto down to revisit the daily order block at $58,232, which would be an ideal place for long-term investors to buy the dips.
On the other hand, if Bitcoin price flips the all-time high at $73,805 into a support floor on the weekly time frame, it would signal buyer strength. Such a development could see BTC consolidate before climbing higher to $80,000.
Frequently Asked Questions (FAQs)
1. What is the expected outcome of the interest rate decision on July 31, 2024?
2. How will the FOMC meeting impact Bitcoin price?
3. What are the potential price movements for Bitcoin after the FOMC meeting?
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