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Bitcoin (BTC) has fallen to $59,500 on Binance ahead of tomorrow's Federal Open Market Committee (FOMC) meeting. Market participants are bracing for a hawkish stance from the Federal Reserve, with expectations that interest rates will remain unchanged.
According to the CME FedWatch tool, only 4.4% of economists expect interest rates to fall for the first time in more than a decade, with the majority (95.6%) expecting rates to remain stable between 525 and 550 basis points.
According to Kobeisi Letter, current market data suggests a 36% chance of no rate cut this year. Four months ago, there was only about a 3% chance that current interest rates would remain the same.
This year's forecast has also been changed to a one-time reduction. Markets had previously expected six rate cuts. Furthermore, the probability of two or more rate cuts has fallen to 31%.
You can't make this up:
According to prediction markets, there is a 36% chance that there will be no rate cut in 2024. @Karshi.
To put this into perspective, four months ago there was about a 3% chance of no rate cut in 2024.
The base case scenario is one rate cut, down from six this year. pic.twitter.com/mTQMDAz99K
— Kobeissi Letter (@KobeissiLetter) April 25, 2024
stagflation risk
In this financial climate, the United States is grappling with the risk of stagflation as inflation continues and economic growth slows.
GDP growth in the first quarter of 2024 slowed to 1.6%, lower than the expected 2.2% and lower than the previous quarter's 3.4%. At the same time, the US core PCE inflation index rose from his 2.0% to 3.7%.
Fed Chairman Jerome Powell said recent data did not further boost the Fed's confidence and suggested it would take a longer timetable to restore stability to the economy. He expressed his belief that current policy is appropriate to avoid immediate risks and suggested that high interest rates could continue without rate hikes.
Bitcoin's trajectory reflects this economic uncertainty, with the cryptocurrency falling below $62,000 at the beginning of the week as stagflation concerns flared up again.
The launch of a Bitcoin and Ethereum spot ETF in Hong Kong yesterday sparked a brief rally of more than $64,000, but the momentum was short-lived as investors became wary ahead of a major Fed decision. didn't last.
Spot Bitcoin ETF inflows slow down
The market has also seen a noticeable slowdown in spot Bitcoin ETF inflows, with BlackRock's iShares Bitcoin Trust (IBIT) stopping new inflows for several days for the first time since its debut. Meanwhile, other funds such as Grayscale Investments continue to see outflows.
The price of Bitcoin has remained unchanged since the fourth halving. Bitcoin is currently trading at around $60,100, down more than 6% in the past 24 hours, according to CoinGecko data, and is likely to end its growth streak that began last September.
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