- The CME FedWatch Tool has indicated that the chance of a discount is small.
- Senator Warren’s letter hinted at Bitcoin’s bullish situation.
With the Federal Open Market Committee (FOMC) meeting scheduled for June 12, the crypto community is abuzz with speculation about its effect on market dynamics.
Current indications suggest that interest rates are likely to remain unchanged. In fact the CME FedWatch tool indicated with only a 0.6% probability of a quarter-point rate cut at the meeting.
Source: CME FedWatch Tool
In other news, Senator Elizabeth Warren wrote one letter to Fed Chairman Jerome Powell on June 10, urging interest rate cuts. The letter urged,
Source: Warren.senate.gov
Impact on the crypto market
According to CoinMarketCapAt the time of writing, the global crypto market was down 0.45% over the past day, due to FUD (Fear, Uncertainty, and Doubt).
Additionally, on June 11, Bitcoin [BTC] Spot Exchange Traded Funds (ETFs) saw significant outflows of $200.4 million, with Grayscale Bitcoin Trust ETF (GBTC) according to Farside Investors.
Source: Farside Investors
Here it is important to note that interest rate cuts often lead to bullish momentum for risky assets such as Bitcoin and cryptocurrency. So Senator Warren’s call could ultimately help Bitcoin and the crypto market in general.
Inflation remains persistent
It goes without saying that inflation in the US has been a concern for quite some time.
According to the Bureau of Labor Statistics and the Department of Commerce, the Federal Reserve’s preferred inflation measure, the Personal Consumption Expenditures (PCE) index, has shown faster improvement compared to the Consumer Price Index (CPI).
However, both indicators point to persistent inflation.
Source: Bureau of Labor Statistics and Department of Commerce
The optimism remains
Despite concerns, Michael van de Poppe took to X (formerly Twitter) and commented:
“It’s important to note that price action can be trappy. If the interest rate decision remains unchanged, the markets may initially have a downward reaction, but usually the real move takes place at a later date.”
Elaborating further on his position, he said:
“Bitcoin rose more than ten percent after previous FOMC events. Ethereum rose by more than twenty percent after previous FOMC events. Both were corrected by the same amount before the event, so an upward repricing seems reasonable to expect.”
AMBCrypto’s analysis of Santiment data further confirmed this, revealing a significant spike in social volume for Bitcoin and Ethereum [ETH].
Source: Santiment
So while everyone waits for the Fed’s decision on interest rates, it would be interesting to see if history would repeat itself or if the market would suffer from the fallout of the FOMC meeting.