The cryptocurrency market has gone through a period of ups and downs lately. There was a surge in interest from global investors followed by a sudden decline last Friday. On March 15, flagship cryptocurrency Bitcoin suffered a decline from its recent peak, sparking concerns among investors. However, it quickly gained momentum, indicating continued confidence in the crypto asset segment. Meanwhile, amid this volatility, all eyes are on the upcoming Federal Open Market Committee (FOMC) decision and Fed Chairman Jerome Powell’s speech on March 20.
Cryptocurrency market focused on FOMC and FED President’s speech
The recent release of inflation data has sparked speculation in the global financial sector, let alone the crypto market. In particular, the February Consumer Price Index (CPI) exceeded expectations by increasing by 3.2%. In addition, the Producer Price Index, another important indicator in measuring inflation, increased by 1.6% in the same period, increasing concerns about the Fed’s future actions regarding interest rates. This data affected the sentiment of the crypto market.
Additionally, investors are now waiting for a potential change in the Fed’s interest rate cut plans. Remarkably, the market is now betting on a three-rate cut in 2024, rather than the five-rate cut as previously expected. On the other hand, inflation figures that were higher than expected attracted attention. It led to a re-evaluation of the Fed’s future policies, especially interest rates. The unexpected increase in both CPI and PPI was critical.
Because it caused investors to speculate whether the Fed would maintain its current stance or follow a different action plan. As a result, market sentiment is fluctuating as investors closely monitor the upcoming FOMC decision and Jerome Powell’s speech to provide insight into the Fed’s future plans.
Market reaction and expectation
Anticipation regarding the FOMC decision and Powell’s speech has led to cautious trading in the crypto market. Investors are preparing for potential short-term volatility or weak trading conditions leading up to the event. However, despite this cautious approach, optimism regarding the long-term prospects of the cryptocurrency market prevails. Factors such as the upcoming Bitcoin halving and increased inflows into Bitcoin ETFs continue to fuel bullish sentiment among investors.
While the market awaits important statements from the Fed, investors are adopting a wait-and-see approach. Although short-term fluctuations may occur, the overall trend of the cryptocurrency market remains positive. Investors in particular are optimistic about the future and confident in the resilience of cryptocurrencies in the face of evolving economic dynamics. Therefore, the impact of the FOMC decision and Powell’s speech will be closely watched, with potential consequences for both the traditional and crypto markets. Meanwhile, there is a 98% chance that the Fed will leave interest rates unchanged, according to the CME FedWatch Tool. So only a 2% rate reduction is anticipated.
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