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What to expect from the FOMC on Wednesday
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The week began with the Bitcoin chart falling below the $60,000 region. BTC is trading at $59,000 at the time of writing, but this week is crucial for the market. This is because the FOMC meeting, the US Open Market Committee, will take place on September 18th and this could impact Bitcoin.
The market is expected to cut interest rates by 50 bps, as we can see in the pricing of the interest rate curve below. At the moment, the market expects that by December the total cut will be 0.75%. After all, the narrative is that the labor market has slowed substantially and inflation is returning to target at a healthy pace.
Cryptocurrencies are set to benefit, whether through custody or through ETFs, as the cost of financing becomes increasingly low, this sector of the industry is receiving more investment. It is worth noting that ETH ETFs have had little impact on the value of Ethereum.
FOMC and cryptocurrencies
Although many may not agree, today neither Bitcoin, nor Ethereum, nor any other currency in the ecosystem is considered a security, but rather a risk, from an investment point of view. Now, in the medium/long term, there is a positive scenario for cryptocurrencies. This is because there is a “de-inversion” of the interest rate curve. Thus, there may soon be a natural rotation in asset classes that have been “crushed”, such as the Dow Jones and Russell, and this may extend to cryptocurrencies as well.
If the FOMC comes out with a 25bps cut, this could be negative for the market. After all, it shows a lot of patience and a longer horizon for investing in crypto than we currently have. Still, it is important to note that it is a given that the cycle of cuts will begin. So, it will not be an isolated cut. From now on, the entire meeting could have a cut, which continues to provide a positive horizon for cryptos.
Finally, we cannot fail to mention the dot plot, which shows the FOMC members’ perspective on future interest rates. This is the data that the entire market is ready to follow and place its bets on.
What to expect from the FOMC on Wednesday
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What to expect from the FOMC on Wednesday
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What to expect from the FOMC on Wednesday
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What to expect from the FOMC on Wednesday
