Fed Leaves Interest Rates Unchanged, But More Hikes Still on the Table | USAEMALL.com

As anticipated, the Federal Reserve (Fed) left benchmark rates of interest in the US unchanged at 5.25-5.5% on Wednesday.

Bitcoin (BTC) fell simply over 1% and was final buying and selling just below $27,000, although nonetheless stays pretty near month-to-month highs.

Despite the pause, Fed Chairman Jerome Powell stated in his post-policy announcement remarks that one other curiosity hike later this yr stays potential, with analysts thus referring to Wednesday’s Fed announcement as a “hawkish pause”.

In the Fed’s up to date dot-plot – a chart launched quarterly that summarizes the place Fed policymakers undertaking US rates of interest can be in the coming years – 12 of 19 Fed policymakers predicted one other 25-bps rate of interest hike this yr.

The new dot-plot signaled that Fed policymakers anticipate simply two fee cuts in 2024, down from the earlier projection of 4.

Fed policymakers additionally upped their development expectations for the US financial system, anticipating development of two.1%, reflecting elevated confidence at the central financial institution {that a} “soft-landing” for the US financial system can nonetheless be achieved.

A “soft landing” is outlined as the Fed managing to carry inflation again underneath management with its rate of interest hikes with out pushing the financial system into recession.

The up to date dot plot and financial projections seem to not have stunned the market a lot, with macro traders having seemingly spent the previous few week pricing in a higher-for-longer rate of interest state of affairs from the central financial institution.

The US Dollar Index (DXY) assist above 105, near six-month highs, whereas the US 2-year authorities bond yield held above 5.1% and near 22-year peaks.

Bitcoin Market Little Affected By Fed Policy Decision

The newest coverage announcement seems to not have impacted sentiment in the Bitcoin market an excessive amount of.

While the Fed’s sudden coverage shift in direction of an aggressive tightening cycle in 2022 was a significant driver of final yr’s Bitcoin bear market, macro themes have had much less affect on the cryptocurrency this yr.

Given good progress on bringing US inflation again to the Fed 2.0% purpose in 2023, a way that the “worst is behind us” in the case of Fed financial coverage tightening has seemingly led to a way of calm in the crypto house, a minimum of, with reference to the macro outlook.

Bitcoin appears snug with the concept that the Fed may hike rates of interest yet one more time this yr, seemingly on account of continued expectations for the begin of a brand new rate of interest chopping cycle in 2024, even when that chopping cycle is now anticipated to be much less aggressive.

Bitcoin merchants at the moment are attempting to evaluate whether or not the cryptocurrency can muster up ample value momentum to interrupt out of its latest multi-week $25,000-$28,500ish vary.

Price Risks Tilted to the Upside

Indeed, the cryptocurrency seems to now be caught in one thing of a no man’s land, hovering in the center of this aforementioned vary in the $27,000s and just under its 200DMA.

If tail dangers materialize, like one other inflation surge that forces a couple of additional rate of interest hike from the Fed, or one other main crypto trade collapse, a drop again to the low $20,000s, and even decrease, stays a chance.

US authorities continues to dig into Binance’s affairs with the SEC presently suing the trade over working illegally in the US and over accusations of fraud – a Binance collapse could be a crypto disaster due to their dominant market place.

But tail dangers apart, with Bitcoin nicely established as a crypto secure haven (there isn’t any threat the US SEC will label it a safety) and spot ETF approvals anticipated in the US in the coming quarters, value dangers stay tilted to the upside.

A break above $28,500 may very well be the catalyst for a gentle grind again to 2023’s highs, as traders eye one other upcoming bullish in the type of subsequent yr’s Bitcoin halving.