Given that the FOMC meeting is only a matter of days away, it’s currently dominating financial markets including bitcoin. The FOMC meeting is expected to be a disappointing one due to past interest rate rise trends as well as the persistent threat of inflation. A Fed interest rate increase is possible, with a significant impact on the crypto market.
FOMC Meeting Draws Near
According to official plans, the next FOMC meeting is scheduled for November 1-2. This meeting is held approximately once every 1 to 2 months. It is crucial because it is the place where the Fed makes decisions about the economy and how to keep it healthy.
Inflation rates have been at an all-time high in 2022, which is a marked departure from previous years. This has had a significant impact on the US economy and other economies worldwide. The Fed had to adjust its policies to address rising inflation rates, which have reached levels that were unprecedented in recent decades.
For the past couple of months interest rate rises have been the rule, and in many cases they are higher than predicted. Wu Blockchain is the winner this time. saidWith an 81% likelihood of it happening, the anticipated interest rate rise will be 75 BPS. This would mean that the Fed will increase the interest rates by 75bps in the next four weeks. It could potentially have adverse consequences for crypto assets such as Bitcoin.
Next week on November 2, the United States will release the Fed Interest Rate Decision. The probability of interest rates being raised by 75bps or more is 81%. The U.S. unemployment rate for October will be released on November 4. https://t.co/nGgrVQN0to
— Wu Blockchain (@WuBlockchain) October 31, 2022
What will Bitcoin do?
Past performances can be used to predict what the future holds in regards to Fed interest rate increases. The crypto market and bitcoin will experience volatile weeks if the Fed’s current forecast of another 75 basis points turns out to hold true.
Source: BTCUSD from TradingView.com| Source: BTCUSD on TradingView.com
The price of bitcoin was very negative in September, when the Fed last raised interest rates. In fact, it would prove to be the most volatile reaction to the FOMC meeting given that BTC’s price had dropped more than 5% in one minute. It was the third consecutive increase in interest rates.
Market volatility is likely to increase with another interest rate rise this week. This will also coincide with the profit-taking that is currently ongoing due to bitcoin’s recovery above $20,000. The last straw could bring the digital asset below $20,000 again.
But, interest rate rises will not continue for long. There is a possibility that the trend will reverse by 2023. This would be a great opportunity to grow risk assets, such as biotin.
Featured image by Coinews. Chart from TradingView.com
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