How Will The FOMC Meeting And Interest Rate Cut Affect The Crypto Market?
The US Federal Reserve is set to announce its interest rate decision following its FOMC meeting today. A Fed rate cut will undoubtedly be pivotal for the crypto market as it is expected to have a massive impact on crypto prices. Crypto prices already reacted ahead of this macro decision and could again experience high volatility after a rate cut announcement.
The FOMC Meeting Will Impact The Crypto Market
The crypto market is expected to react positively to an interest rate cut decision following the FOMC meeting. Historically, Fed rate cuts have been bullish for BTC price. By extension, other crypto prices have also rallied alongside the flagship crypto. The last rate cut, in March 2020, marked the beginning of the Bitcoin bull market, which sparked significant rallies for altcoins.
A Fed interest rate cut helps boost investors’ confidence in investing in or increasing their positions in risky assets like Bitcoin and altcoins. This will cause more liquidity to flow into the crypto market, raising prices.
In an X post, crypto trader Emperor opined how the Fed’s rate decision at the FOMC meeting could affect the market. He expects the market to pump once the rate cut is announced. Shortly after that, he predicts that the market will dump from short-term traders and event trading retail taking profits.
Therefore, a rate cut following the Fed meeting could be a ‘sell the news’ event, leading to a short-term market crash. However, in the mid-term and long-term, Emperor expects the market to become “clean” and start pumping nonstop.
Crypto billionaire Arthur Hayes said the upcoming interest rate cut will crash Bitcoin and the crypto market. He asserted that the market could crash within a few days as the interest rate gap between the US Dollar and Japanese Yen narrows. The BitMEX co-founder had earlier this month stated that the Fed rate cut might not go according to plan.
The Market’s Long-Term Outlook Is Bullish No Matter What
The crypto market has a long-term bullish outlook no matter what happens. In the short term, there is expected to be much volatility, which could cause crypto prices to decline. However, there are many reasons to be bullish on these crypto assets in the long term. Historical trends suggest that the market is nowhere near its peak.
Instead, the Bitcoin bull run, leading to a market rally for altcoins, is only set to begin. The flagship crypto historically enjoys a post-halving rally around this period, which ushers in the ride to a market peak. Bitcoin peaks 480 days after the halving. Therefore, no matter what happens after the FOMC meeting, the crypto market is still in for a bullish ride.
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