Will This Have An Impact on Bitcoin’s (BTC) Price Rally?

TL;DR

• Bitcoin enthusiasts and investors are anticipating a potential surge in Bitcoin prices following the possible SEC approval of a Bitcoin spot ETF, which is expected to attract more investment into the cryptocurrency.
• The Federal Reserve’s decisions on interest rates are crucial to Bitcoin’s price movement, with the upcoming December meeting being particularly significant. A rate cut could lead to an increase in Bitcoin prices due to cheaper borrowing costs and increased demand for risk assets like Bitcoin.
• The direction of Federal Reserve rate adjustments is influenced by the state of the economy, with recent robust GDP growth. If growth continues, the Fed may raise rates to curb inflation, which could slow Bitcoin’s rise. Conversely, a slowdown in growth may lead to rate cuts, potentially fostering conditions for a Bitcoin rally similar to the one during the 2020 pandemic.

Bitcoin market watchers are focused on the long-awaited SEC approval for a Bitcoin spot ETF exchange. Cryptocurrency traders and institutional finance expect the price to rally higher when that happens.

Meanwhile, the Fed recently held interest rates steady for the time being at its November meeting. The central bank’s next move could have a wide-ranging impact on Bitcoin prices in cryptocurrency markets.

How The Fed Moves Bitcoin Price

What Bitcoin price does next after a tremendous October rally could hinge on what the Fed does at its next meeting on Dec 12. As a recent update on FXStreet Crypto explains:

“Typically, a rate cut makes it cheaper to borrow funds and engage in leveraging risk assets like Bitcoin for gains. An increase in demand and inflow of funds to the asset likely drive prices higher.”

But whether the Fed hikes, lowers, or holds rates steady all hinges on the economy. GDP grew at a furious 4.9% pace in quarter three, driven mostly by seemingly unstoppable consumer spending. But it’s anybody’s guess what the economy will do next.

Early Leading Indicators: GDP, Interest Rates

If the economy continues such phenomenal growth, then the Federal Reserve is apt to raise rates again to cool the economy back down and keep inflation from spiraling out of control. That could raise headwinds that slow Bitcoin price growth.

But if a year of rate hikes does their trick and GDP growth finally slows, the Fed will begin to seriously consider ending 2022’s high-interest rate regime with a round of cuts.

Lower interest rates and an increase in the money supply are what drove Bitcoin price’s most phenomenal rally in history during the 2020 pandemic. When the Fed begins cutting rates again, it will raise a massive tailwind of support for rising Bitcoin prices.