Bitcoin could rally regardless of what the Federal Reserve FOMC decides this week: Here’s why
Key Takeaways:
The decision of interest in the interests of the US Federal Open Market Committee (FOMC) on May 7 will be a moment's determination for risk assets, including cryptocurrencies. While consensus points to no change in interest rates, Bitcoin (BTC) and Altcoins can see gains if the US treasury is forced to inject liquidity to stop an economic backbone.
A more financial policy may provoke the activity, but the Federal Reserve (FED) is also arguing with a weakening US dollar. Some analysts argue that a US interest rate cut may fail to stimulate growth as the rising risks continue, which potentially creates a fine environment for alternative fence assets such as cryptocurrencies.
Economist and investor Jim Paulsen records that when funds feed the trade above a “neutral” interest rate (Fed funds the annual major personal consumption index), the economy has a history of moving towards backing or a “backward growth,” a time of slippery growth with rising consumer demand. Similar patterns since 1971 have supported this review.
According to Paulsen, the Fed is likely to be forced to lower interest rates. In addition, central bank chair Jerome Powell is under significant pressure from US president Donald Trump, who criticized the Fed for not reducing capital costs quickly.
Reasons why fed may begin to bear
Concerns about the overheating market remain as US consumer inflation exceeds the target of 2%, and unemployment unemployment rates of 4.2% suggest that there are no signs of economic weakness.
Market expectations, as seen in Treasury's yield futures, show a 76% chance of interest rates at 4.0% or less than Sept. 17. This possibility dropped significantly from 90% on April 29, according to the CME Fedwatch tool.
Entrepreneurs are less confident that the Fed will ease the financial policy. While this may initially seem bearish for risk ownership, it can prompt a treasury to injeise liquidity in markets to support government spending.
Regardless of the FOMC's decision, some analysts pointed out that the recent $ 20.5 billion Bond of Fed's treasury buy On May 5 signal the intervention was changed. Further liquidity is a history that has become bullish for cryptocurrencies, especially if the US dollar is behind other major global currencies. As a result, investors are increasingly looking for alternative fences than handling cash.
Related: Bitcoin price rally at 1,550% in the last time the 'BTC risk-off' metric fell to this low
The US Dollar Index (DXY) has dropped below 100 for the first time since July 2023, as investors retreat from US markets in the midst of economic uncertainty. Meanwhile, gold rose by more than 12% in the past 30 days and is now trading 2% below the full time of $ 3,500. Refusing to trust in the US treasury's ability to finance its debt favors the deficiencies of property such as Bitcoin.
While the likelihood of many rates in the rate is reduced, this situation can be desirable for cryptocurrencies. If the Fed is forced to expand its balance sheet, it is likely to inflation fuel and erase the amount of investment factors fixed income that ultimately supports cryptocurrencies.
This article is for general information purposes and is not intended to be and should not be done as legal or investment advice. The views, attitudes, and opinions expressed here are unique and do not necessarily reflect or represent the views and opinions of the cointelegraph.
