Crypto Markets on Sidelines as Atlanta Fed Sees One Rate Cut This Year

Crypto markets were on careful watch as the Federal Reserve decided to keep the rates unchanged at this March meeting. But it did signal three rate cuts to happen this. However, according to Bloomberg, president of the Federal Reserve Bank of Atlanta Raphael Bostic says that he now only sees plans of lowering interest rates once this year, and that rate decrease would probably occur later than he had anticipated.

Fed’s Previous 3 Rate Cut View

The change in the forecast regarding the Fed’s rate cut trajectory comes at a time when the market had already been hopeful for upcoming rate cuts. The market had priced in around three rate cuts for 2024 since December of 2023, with the first-rate decrease expected at the March meeting. However, the expectations of the same greatly decreased due to repeated indications from economic statistics and the Fed officials themselves. In a similar vein, the June rate cut that was originally anticipated has now been pushed even further until September or later. This could put some pressure on crypto markets.

Jerome Powell, the chairman of the Federal Reserve, had said in the past that he does not believe a recession is imminent in the US economy. He did, however, point out that there is uncertainty surrounding future inflationary advances, making it difficult to predict when the central bank will cut interest rates and promote current growth.

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Why is This Important for Crypto Markets?

Investors have historically relied heavily on the Federal Reserve’s rate choices when evaluating assets. Lower interest rates frequently cause government securities to lose value, which increases the appeal of bitcoin and other crypto assets. Investors may decide to hang onto traditional assets for the time being as a result of the Fed delaying rate reduction, which has caused the cryptocurrency markets to anticipate volatility. Positively, though, a robust economy also keeps investor demand at high levels. In thriving economies, purchasing power is usually stable, and riskier investments are favored. The Fed’s decision is unlikely to halt the cryptocurrency markets’ current rate of growth in such a situation.

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