Crypto awaits FOMC meeting – Lull before the storm?

With the FOMC meeting due to take place later today, all of crypto is waiting with bated breath for the signals that can move the market up or down.

Today’s Federal Open Market Committee will pass off later in the day. In the meeting the new Federal Funds Rate will be announced, which is widely expected to be yet another 75 basis point raise.

However, it’s after the meeting when Chairman Jerome Powell gives a speech and answers questions that all eyes and ears will be riveted on the Fed chair and what he has to say.

These speeches and the question/answer slots are traditionally the times when the Fed seeks to give the market some guidance on what its stance might be going into the immediate future. In past sessions the market has moved abruptly on what it has construed as hawkish or dovish sentiments from the Fed chairman. 

For this meeting the market is expecting, or perhaps hoping, that after 4 straight 75 basis point rate rises, the Fed will want to signpost lower future rises or even just a pause in order to let the previous rate rises filter through the market and give signs that they have done their job of blunting inflation.

Should lower future rates and an end to quantitative tightening be on the Fed agenda for 2023 then all markets are likely to see some gains. The crypto market in particular would benefit from this given that some analysts are saying that Bitcoin and many of the cryptocurrencies are starting to find a bottom.

However, as far as the Federal Reserve is concerned, the most important thing of all right now is that the market doesn’t take off and start making more inflationary spending. 

Chairman Powell is going to have to walk a tightrope with the fear of worsening inflation on the one side, and a just as terrible fear of driving the market into a really bad recession on the other side.

Falling one way or the other is likely to lead to bad economic times becoming much worse. Therefore Jerome Powell must keep a straight face and dance his way through today’s minefield of a meeting with the sublime grace of a contortionist. The United States, and the world depend on it.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.