The crypto market is waiting for the Fed meeting

Two weeks ago it was expected that the US Federal Reserve System (FRS) could raise the interest rate by 50 bp. Fed Chairman Jerome Powell told Congress that the central bank is not afraid to increase the pace of rate hikes if necessary. But after that there was a series of collapses of American banks, the largest of which was Sillivon Valley Bank (SVB), and now the situation looks different.

Participants in the cryptocurrency market, just like all other markets, are waiting for the Fed’s decision and its consequences for the price of crypto assets. Interviewed RBC Crypto analysts told how the price might behave after the Fed meeting. The Fed’s decision will be announced at 21:00 Moscow time.

“The situation has changed dramatically”

Head of Analytical Department AMarkets Artem Deev

Now the Fed rates are 4.5-4.75%, and the decision will be quite expected if the regulator raises the rate by another 0.25%. At least, this was stated, despite the banking crisis in the United States, because. the inflation rate (6% at the moment) is still far from the target.

For many years, bitcoin has shown an inverse relationship with the Fed rate: when it decreases, the value of the coin grew, and the capitalization of bitcoin and other cryptocurrencies increased. When the rate was raised, the opposite happened: bitcoin fell (we observed this over the past year).

But now the situation has changed dramatically: bitcoin went up against the backdrop of the banking crisis in the United States, despite the prospect of raising the rate again. This happened, probably, because investors began to save their money, taking it from the banking system and shifting it into digital assets (gold, the main protective asset, went up in the same way).

Obviously, the rate hike will further exacerbate the difficult situation in the US banking system, where the prospects for bankruptcy threaten another 40 credit institutions (according to one source) or 200 banks (as other experts and economists say). This means that the flight of capital to precious metals and bitcoin may continue. In this scenario, bitcoin can cross the $30,000 mark tomorrow or the day after tomorrow.

“Looking forward to Powell’s performance”

Financial Analyst BitRiver Vladislav Antonov

Now all attention is directed to the results of the meeting of the US Federal Reserve. Market participants are eager to know whether the regulator will raise rates or take a break. According to the latest data from the CME FedWatch Tool, there is an 89% chance that the Fed will raise rates by 25 basis points.

Before the announcement of the decision of the regulator, bitcoin may test the level of $ 29 thousand. Then the dynamics will depend on the decision of the Fed and Powell’s speech.

Bitcoin actually reacts not to a change in the rate, but to the dynamics of the dollar and the S&P 500 index. The weakening of the dollar and the growth of the index push its price up. The rally of the dollar and the fall of the index, respectively, reduce the price.

The road to the $33,000-34,000 zone is open for bitcoin. If a sharp correction does not follow after the US Federal Reserve meeting, then after a short consolidation (about two weeks), we can expect bitcoin to strengthen to $34,000. We are waiting for Powell’s speech.