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The interest rate in the US is 4.50-4.75 basis points.
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The price of Bitcoin (BTC) remains above $100,000.
Today, December 18, a day of high volatility is expected for bitcoin (BTC) and cryptocurrencies. This Wednesday the decision on the interest rate of the FOMC, the body in charge of defining the monetary policy of the United States Federal Reserve (Fed), will be known.
The announcement is scheduled for 2:00 PM New York time (7:00 PM UTC). Half an hour later, the head of the Fed, Jerome Powell, will give a speech to give details of the decision.
As CriptoNoticias already reported, the market expects a new cut of 0.25 basis points about interest rates. Currently, it is 4.50% to 4.75% annually.
In Polymarketa Cryptocurrency betting platform, 96% of bettors expect a decrease of 0.25 points, while the remaining percentage believe there will be no changes.
The survey that was carried out CME Group also returns the same results: 96% of the analysts consulted believe that the interest rate will be 4.25% to 4.50%.
If the projections are met, this would be the third cut in the interest rate so far in 2024. The previous ones were in August and September.
Interest rates in the United States in each Fed decision and its forecast. Fountain: Investing.
On previous occasions, the markets reacted upwards after the interest rate cuts were known, so, if the forecasts are met, It is likely that interest in assets considered risky such as stocks will expand again. bitcoin and the cryptocurrencies.
This happens because when the interest rate falls, the yield on Treasury bonds, known as the safest investment in the world, falls. In addition, the cost of credit is lower and, therefore, there is greater liquidity in the economy. It is then when investors decide to move their holdings towards assets considered risky, with the aim of obtaining greater profits.
However, in a more pessimistic scenario where the Fed chooses to maintain or increase the interest rate, BTC and cryptocurrencies could experience a sharp price drop.
On the other hand, if the cut exceeds expectations, it could negatively affect the markets, as it would be interpreted as a sign of economic weakness.
According to the company Santiment analysis“trader narratives show expectations that the bullish rally will continue with likely rate cuts.”
Furthermore, he adds: “Cryptocurrencies, closely linked to stock markets, have already reacted positively and can gain even more once the cuts are confirmed.”
Meanwhile, the price of the coin created by Satoshi Nakamoto remains above $105,000, after touching $108,000, its all-time high (ATH).
Bitcoin price from March to December 18, 2024. Source: TradingView.
It is worth clarifying that Japan, the United Kingdom and Mexico will decide interest rates this Thursday. On Friday, December 20, US personal consumption expenditure (PCE) will be released.
This is the Fed’s favorite indicator to define monetary policy because it is more precise than the consumer price index (CPI).
If the PCE falls, it is a sign that the prices of goods and services purchased by households in the United States are declining, suggesting effective control of inflation.
Given this scenario, the bullish sentiment in the markets could increase if the results are as expected.
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