Facing the approaching Federal Reserve decision on interest rates, the cryptocurrency market is experiencing a period of uncertainty. Bitcoin, the leader among cryptocurrencies, is in a consolidation phase around the $41,000 level. Investors and traders eagerly await guidelines that may significantly influence the further development of the market situation.
Bitcoin Price Movement
Analyzing price movements, it’s important to pay attention not only to the derivatives market. Although some of the price declines may be related to this market segment, the full picture of the situation is more complex. After Bitcoin reached a price of $40,200 on Monday, the impact of liquidation orders quickly faded, suggesting that recent declines were not solely the result of activity in futures markets.
An important indicator that investors pay attention to is the Bitcoin futures premium, also known as the basis rate. Despite a 9% price drop during the day on Monday, the BTC futures premium remained above the 10-percent threshold from neutral to bullish, indicating market resilience and possible continued optimism among key players.
The Role of the Federal Reserve in Bitcoin Pricing
Ahead of the Federal Reserve’s decision on interest rates, caution is observed in the cryptocurrency market, confirmed by a 40-percent drop in trading volume in the last 24 hours. Fed Chairman Jerome Powell is set to present a summary of economic forecasts after the release of Consumer Price Index (CPI) data, which showed a drop in U.S. inflation to 3.1%, in line with market expectations.
Investors fear potential interest rate adjustments, with a prevailing opinion that the Fed will maintain rates in the range of 5.25% to 5.50%. The Fed’s previous decision to pause interest rate hikes was expected, allowing for an assessment of the impact on inflation and economic growth. Uncertainty regarding potential future rate hikes contributes to Bitcoin price instability.
In traditional financial markets, increases are observed. Futures contracts for the Dow Jones index rose by 0.11%, while the S&P 500 and Nasdaq 100 gained 0.11% and 0.18%, respectively. Investors will closely monitor Jerome Powell’s comments in search of clues regarding the timing of potential interest rate cuts. The CME FedWatch tool indicates market expectations for the start of interest rate cuts next year, but Powell may not agree with this scenario. The yield on treasury bonds also fell, with 10-year treasury bonds reaching a level of 4.2% after a previous increase to 5% in October.
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