Bitcoin and Crypto Market Await the Fed’s Next Move: What’s Next?

• Crypto markets have experienced uncertainty lately due to mixed signals in the Fed’s interest rate reduction drama.
• LSEG IBES statistics show that S&P 500 companies are on track to increase their fourth-quarter earnings by 10% compared to the same period last year.
• The strong performance in stocks was highlighted by Nvidia’s earnings. Nvidia reported adjusted earnings per share of $5.16 for the quarter with revenue of $22.1 billion.

The rising trend in the U.S. stock market and the policy the Fed will pursue are closely watched in the crypto market: What will happen next?

When Will the Fed Start Interest Rate Cuts?

Crypto markets have been shaken recently due to mixed signals in the Fed’s interest rate reduction drama, causing uncertainty. The recent rise in the U.S. stock market, which further intensified these concerns, indicated that buying power might still be alive among investors. Amid uncertainty, the belief that interest rates will remain stable for a longer period has strengthened.

According to a report by Reuters, this year, the S&P 500 has reached record levels due to the impact of strong corporate performance. This rise has diverted attention from the Federal Reserve’s challenging journey toward lower interest rates. Some investors believe that after the earnings season, monetary policy will take center stage.

LSEG IBES statistics show that S&P 500 companies are on track to increase their fourth-quarter earnings by 10% compared to the same period last year; this would be the highest increase since the first quarter of 2022, despite the majority of reports. The increase in stocks has also boosted sentiments for assets like crypto.

A significant indicator of the strong performance in stocks was Nvidia’s earnings. Nvidia reported adjusted earnings per share of $5.16 for the quarter with revenue of $22.1 billion. Analysts’ forecasts were $20.4 billion in revenue and $4.60 per share. This marks a significant increase from Nvidia’s previous quarter, where it had revenue of $6.1 billion and earnings per share of $0.88. The fact that Nvidia generated $27 billion in revenue for the 2022 fiscal year further emphasized the company’s success.

Fed’s Uncertainty Approaches, Data Will Guide

U.S. data figures have strengthened predictions that the Fed may postpone interest rate cuts for some time. Since the beginning of the year, investors have been making possible assumptions about the speed and size of the Fed’s interest rate cut. However, market participants are already pricing in bets that, despite warmer expected data, interest rate cuts will only happen in June or July. This change in plans contrasts with previous predictions of interest rate cuts in March and May. The current stock market rally, along with signals that buying power may continue, further reinforces this situation.

Crypto Markets Cautious with a Larger Economic Background

Investors have typically given significant weight to Federal Reserve interest rate decisions when assessing assets. Low interest rates often devalue government bonds, making assets like crypto more attractive. The possibility of investors sticking to traditional assets for a while longer due to the Fed’s decision to postpone interest rate cuts has led to increased preparedness for volatility in crypto markets.

However, a positive strong economy keeps investor demand high. Purchasing power usually remains stable in positive economies, and risky investments are preferred. In this case, there is a high likelihood that crypto markets will continue to rise at the current pace despite the decisions of the Fed.