- The Fed’s interest rate decision on Nov 7 is highly anticipated, with a 98.9% chance of a 25 basis-point cut.
- The Fed’s decision could significantly spark a rally in the crypto market, with BTC currently trading in the $69K zone.
The cryptocurrency market gears up for a crucial week; all eyes are on the upcoming FOMC interest-rate decision from the US Federal Reserve—set for November 7. This announcement is highly anticipated, as it could significantly impact market sentiment and outline the future of Bitcoin (BTC) and other altcoins. Current predictions signal a 99.9% chance of a 25 basis-point rate cut (4.50%-4.75%)—which many believe would inject some much-needed optimism into the crypto market.
Following a half-point cut in September, the Fed, led by Chair Jerome Powell, is expected to lower its benchmark rate to around 4.6%. Economists are also predicting another cut in December, with further reductions likely next year. This shift reflects a broader strategy to support consumer spending and investment. Even as the economy shows flexibility, it maintains a robust growth rate and low unemployment at 4.1%.
The Fed has set an inflation target of 2%—focusing on maintaining price stability in the economy. Currently, year-over-year inflation has eased to approximately 2.4%, nearing this target. This decline in inflation suggests that the Fed may no longer need to keep interest rates elevated, as excessive borrowing costs could stifle economic growth.
Impact of the Presidential Election on the Fed’s Decision
The Fed’s decision on a rate cut comes after Tuesday’s presidential election, where candidates Kamala Harris and Donald Trump are virtually neck-and-neck in opinion polls. The outcome may take a day to confirm. Regardless of who wins, analysts suggest that the Fed’s move to reduce interest rates could have wide implications for the economy. This decision could also significantly impact the crypto market.
Current opinion polls show Democratic candidate Kamala Harris and Republican Donald Trump nearly tied. Experts believe Trump’s policies on tax cuts and tariffs could drive inflation higher. Additionally, these policies may lead to increased bond yields and a stronger dollar. In contrast, Harris is viewed as a candidate for continuity.
Despite recent political disruptions, traders are cautiously optimistic, buoyed by the latest US job report, which has solidified expectations for the forthcoming rate cut. Historically, lower interest rates tend to encourage a risk-on approach among investors, often benefiting assets like Bitcoin and other cryptocurrencies.
Currently, the global crypto market is showing a slight uptick of 0.37%. The total valuation stands at $2.3 trillion, with Bitcoin trading in the $69K zone. As we are in the final quarter of the year, there’s a sense of anticipation that Bitcoin may replicate its historical performance. That potentially triggers a positive trend for altcoins as well. With so much riding on the Fed’s decision, this week promises to be crucial for all market participants.
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