All eyes are on the Fed’s Bitcoin price, which may fluctuate with inflation, growth and future interest rates.
Bitcoin price can be directly affected
The Federal Reserve’s monetary policy decision is scheduled for this week. The FOMC (Federal Open Market Committee) meets for the first time in 2023 and the stakes for the US dollar look high.
Bitcoin has strengthened against the US dollar so far in January, in sync with other fiat currencies. For this reason, it is said that whatever the Fed’s decision is today, it will also affect the Bitcoin price.
A hawkish Fed could turn bearish for Bitcoin. These are the four areas in which the Fed can express its hawkishness: the inflation outlook, the growth outlook, the interest rate level, and quantitative tightening.
Inflation and growth outlook
The Fed is determined to bring inflation to its 2 percent target. This is why it is raising interest rates so aggressively, so if the Fed says inflation is entrenched and upside risks remain, the US dollar should move higher. In this scenario, the market will bet that the Fed approves continued rate hikes.
The currency stance is that below a sustained trend, a period of growth is likely. It could also trigger a sharp rise in the dollar as the Fed changes its view and sees that the recession should have a significant impact on the inflation outlook.
Interest rate
Ultimately, it’s all about the interest rate level. The fund rate range has reached 4.25%-4.50% and eyes are on what the Fed will do and say today.
The baseline scenario is that the Fed raises interest rates by 25bps and says continued rate hikes are appropriate. Therefore, more than that should be bullish for the dollar and bearish for Bitcoin. The Fed is currently shrinking the balance sheet at a rate of $95 billion a month. The decision to accelerate the balance sheet cut will be very hawkish for the dollar.
Non-farm employment and average hourly earnings
At the beginning of February, January non-farm employment data will be announced. The extent of the impending recession in the United States or whether there will be is still unclear. In any case, employment data will clarify what to expect from the world’s largest economy in the coming months.
Inflation may have peaked, but it is not expected to drop rapidly. Data from Europe yesterday showed renewed upward pressure, and it shouldn’t be surprising to see a similar situation in the US.
Along with job data, Average Hourly Earnings (AHE) will shed light on the US wage trend. Upward pressures should translate into higher inflation in the coming months, potentially moving the dollar and overall financial markets.
Contact us to be instantly informed about the last minute developments. twitter‘in, Facebookin and InstagramFollow and Telegram and YouTube join our channel!
Risk Disclosure: The articles and articles on Kriptokoin.com do not constitute investment advice. Bitcoin and cryptocurrencies are high-risk assets, and you should do your due diligence and do your own research before investing in these currencies. You can lose some or all of your money by investing in Bitcoin and cryptocurrencies. Remember that your transfers and transactions are at your own risk and any losses that may occur are your responsibility. Cryptokoin.com does not recommend buying or selling any cryptocurrencies or digital assets, nor is Kriptokoin.com an investment advisor. For this reason, Kriptokoin.com and the authors of the articles on the site cannot be held responsible for your investment decisions. Readers should do their own research before taking any action regarding the company, assets or services in this article.
Disclaimer: Advertisements on Kriptokoin.com are carried out through third-party advertising channels. In addition, Kriptokoin.com also includes sponsored articles and press releases on its site. For this reason, advertising links directed from Kriptokoin.com are on the site completely independent of Kriptokoin.com’s approval, and visits and pop-ups directed by advertising links are the responsibility of the user. The advertisements on Kriptokoin.com and the pages directed by the links in the sponsored articles do not bind Kriptokoin.com in any way.
Warning: Citing the news content of Kriptokoin.com and quoting by giving a link is subject to the permission of Kriptokoin.com. No content on the site can be copied, reproduced or published on any platform without permission. Legal action will be taken against those who use the code, design, text, graphics and all other content of Kriptokoin.com in violation of intellectual property law and relevant legislation.