The US central bank is scheduled to make an interest rate decision today. With the previous three decisions, Bitcoin went through almost exactly the same pattern. The price rose in the run-up to the meeting, only to crash after the decision and then rise again.
Are we going to see the same thing today, or will it be different this time?
High expectations about interest rate policy of the US central bank
Although the US economy still looks solid, which generally does not require interest rate cuts, the central bank appears to be planning to implement several cuts in the coming months.
The market expects two more interest rate cuts before 2025, including today. While three reductions have also been priced in by the futures market for next year.
At the same time, the US Federal Reserve is expected to announce the end of Quantitative Tightening (QT) today or at its next meeting in December.
That is the process by which they shrink their balance sheet, which simply means that they do not buy assets, but rather sell them. The central bank started that policy in 2022 to tame inflation.
People are now more concerned about the labor market than about inflation, so they are introducing interest rate cuts and possibly the end of QT. If the latter happens today, the pattern of the last three meetings could be broken.
The end of QT would be a bit of a surprise to the market as most people don’t expect it until December, making a post-meeting rally a possibility.
Favorable picture for Bitcoin
Overall, the picture remains favorable for Bitcoin:
- There are midterm elections coming up in the United States that Trump wants to win. For that he needs a strong economy and the support of Wall Street. It should come as no surprise that the US government is supporting the economy in every way possible.
- The US central bank is easing its policy and supporting the economy.
- Economic growth is above average.
- The American consumer continues to spend heavily.
- Companies are pumping billions of dollars into the AI ​​revolution.
- The American stock market continues to break records.
- Stock exchange companies are currently reporting very strong quarterly figures.
These are all circumstances that paint a favorable picture for the Bitcoin price, and make it unlikely that the bull market will simply come to an end.
In addition to the interest rate decision, tomorrow is also an important day for Bitcoin. Then Trump and Xi will meet to discuss the trade war between the United States and China.
This could make it a quite volatile week for the digital currency.
Source: https://newsbit.nl/dit-gebeurde-na-ieder-rentebesluit-wordt-het-ditmaal-anders-voor-bitcoin/
