Key Takeaways
- A dovish interest rate by the Fed could spark strong bullish price action for Bitcoin and altcoins.
- Crypto experts and Users share the expectation of the FOMC on Polymarket with 95% unchanged rates.
- The price of Bitcoin trades around $118,000 as crypto traders and investors patiently await FOMC results.
Ahead of the Federal Open Market Committee (FOMC) scheduled for July 29-30, the financial market, including cryptocurrency, has been faced with market uncertainties regarding a potential interest rate cut as traders and investors remain cautious ahead of its result.
This week’s meeting comes at the back of intense pressure from U.S. President Donald Trump urging Fed Chair Jerome Powell to cut the interest rate, which was followed by a tour of the U.S. Federal Reserve, and maintaining his stance that he believes Powell will cut the interest rate.
Market uncertainties ahead of the FOMC have led to crypto assets, including Bitcoin and Ethereum, trading around $118,400 and $3,830, respectively, as of the time of writing, ahead of market speculation and the potential impact of this interest rate cut on crypto assets.
Crypto Market Expectation and Expert Predictions
FOMC Predictions – Source Polymarket
Ahead of the FOMC result on July 30, Polymarket users predict the Fed decision in July will have no change in interest rate cut, with approximately 95% of users predicting no change and 5% predicting an interest rate cut when the FOMC result comes out.
While the crypto market continues to speculate on a potential interest rate cut, there is a catch if the interest rate were to be reduced, based on crypto experts’ speculation and how the market has responded in the past.
According to crypto trader Misterrcrypto, a dovish tone and no rate cut by Powell could signal bullish price action for the crypto market, including the price of altcoins breaking out from their price range in the last few days ahead of the FOMC result.
Here are some cases that could affect the crypto market ahead of the FOMC result on July 30.
Case 1 – Rates Unchanged, Dovish Tone
If the Fed decides to keep the interest rate unchanged, or cut the rate (Dovish outlook).
Crypto Market Reaction: Bullish market reaction for Bitcoin and altcoins with strong potential to break to the upside and potential new highs for other crypto assets.
For example, during COVID-19, the Fed cut the interest rate, leading to one of the biggest crypto rallies due to huge liquidity presence as the price of Bitcoin rallied from a region of $4,000 to $69,000 and altcoins hit over 1,000X in the crypto bull market of 2020.
Case 2 – Rates Hike or Signal Rate Hike (Hawkish Tone)
The Fed’s rate hike or a potential future rate hike could signal persistent inflation.
Crypto Market Reaction: This could signal bearish market sentiment and a potential withdrawal by institutions from crypto into safer and less risky investment assets. This was seen in the 2022 Fed hawkish move, leading to the price of Bitcoin crashing to lower regions of $20,000.
Case 3 – Feds Hold Rate but Remain Neutral/Mix Tone
If the Feds pause or give an unclear message around future policies, the crypto market could experience short-term volatility and sideways movement, as long as there are no clear directions on the rates.
Although the current market price action lacks volume ahead of the FOMC result coming out soon. A favorable result could see the price of Bitcoin rally to potential new highs.
Bitcoin Technical Analysis – Price Holds Steady Ahead of FOMC
Bitcoin Price Analysis – Source TradingView
The price of BTC has remained in a range for over 10 days since hitting all-time highs of $123,000, as the price trades in a range around $115,500 to $118,600 ahead of the FOMC. A dovish result could see the price breakout above $120,000, potentially aiming for new highs ahead of its monthly close.
Overall market sentiment for bitcoin and altcoins remains bullish following a strong market reaction in July, as the price is expected to build on current price action heading into August.
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