Upcoming FOMC Meeting Is The Most Important Ever For Bitcoin
Categories: Crypto News
Upcoming FOMC Meeting Is The Most Important Ever For Bitcoin
- With the Bitcoin price posting a small gain of over 1.5% over the last seven days, the market is in for a blockbuster next week.
- The release of the Consumer Price Index (CPI) on December 13, Tuesday at 08:30 AM ET, will once again be "the most important CPI ever".
A Blockbuster Week
- The dot plot is released only four times a year – in March, June, September, and December – and presents the FOMC's economic projections, which look at GDP, unemployment rates, and inflation for the coming months as well as over the longer term.
- Within the dot plot, each member of the Committee publishes its view of potential interest rates over the longer term.
- For investors, this is extremely useful information as it allows market participants to see if the consensus path for longer-term interest rates is changing.
- The markets, as well as Bitcoin investors, will therefore be eagerly watching the inflation forecasts for next year, as well as the interest rate expectations for 2023 and 2024.
- As economic journalist Colby Smith wrote in November, the September dot plot showed most officials favored a slowdown to 50 basis points in December.
- The question for next week will be whether the Fed, led by Powell, will put into play a slower rate hike pace of 25 basis points (bps) or even a pivot.
A Year-End Rally for Bitcoin?
- These two events could be the "last remaining hurdles" for a year-end rally for Bitcoin, QCP Capital wrote in an analysis.
- However, a higher-than-expected consumer price index and a tighter stance by the Federal Reserve could derail that rally, as was seen in the April and August reversals.
- On the other hand, further disinflation could lead many to seek a continuation of the rally through the end of the year, according to QCP Capital's analysis. It goes on to say that the question markets now face is where inflation will bottom.
Will Powell Follow His Words
Given Powell's recent comments to the Brookings Institute on November 30, it is also likely that the FED will stick to the script and raise the policy rate by only 50 basis points to 4.5%, reinforcing bullish sentiment in the market.
If the CPI even comes in below expectations, markets could frontrun the Fed's decision and trigger an end-of-year rally. In any case, next week will provide blockbuster volatility in the Bitcoin and crypto markets.