Increased Likelihood of Fed Rate Cut Boosts Bitcoin Prospects Ahead of December Meeting
The likelihood of a Federal Reserve interest rate cut in December has surged to 74.5%. This adjustment, potentially the third for the year, aims to lower the target rate. Bitcoin’s value has more than doubled in 2023, with speculations it may reach $100,000 if the Fed cuts rates. Key insights from Jerome Powell’s upcoming remarks on December 4th will be instrumental in shaping market expectations.
The likelihood of a Federal Reserve interest rate cut in December 2023 has significantly increased, now standing at 74.5% according to the CME FedWatch tool. This potential adjustment would be the third cut for the year and aims to decrease the target range from the current 4.5%-4.75% to 4.25%-4.5%. This uptick in probability reflects a rising market optimism regarding a forthcoming 25-basis-point reduction, shifting from 66% just days prior.
In a recent address, Federal Reserve Governor Christopher Waller indicated his prospective support for a rate reduction, asserting, “At present, I lean toward supporting a cut.” Nonetheless, he noted that forthcoming data on employment, consumer spending, and inflation could influence his position. Additionally, New York Fed President John Williams expects rates to decline eventually but has refrained from explicitly endorsing a reduction for this month.
The anticipated lower borrowing costs tend to elevate interest in riskier assets, such as cryptocurrencies. Bitcoin’s current value—approximately $95,800—has seen more than a twofold increase this year, driven by positive sentiment in the U.S. market and regulatory reforms suggested by President-elect Donald Trump. Analysts speculate that Bitcoin may reach $100,000 by year-end, contingent on a Federal Reserve rate cut.
Market participants are eagerly awaiting insights from Federal Reserve Chair Jerome Powell, who is slated to discuss monetary policy in New York on December 4th. His forthcoming remarks could either bolster or diminish expectations surrounding a December rate cut, influencing market behavior as the Fed convenes for its meeting on December 17-18. Investors looking to gauge the Federal Reserve’s trajectory would benefit from utilizing the TipRanks Inflation Rate tool to observe current inflationary trends.
The article discusses the increasing likelihood of a rate cut by the Federal Reserve, highlighting current economic conditions and their influence on various financial markets. It contextualizes the potential implications for both interest rates and the performance of cryptocurrencies, specifically Bitcoin, illustrating how lower borrowing costs generally boost demand for riskier investments. Furthermore, it emphasizes the importance of upcoming speeches by Federal Reserve officials, particularly Chair Jerome Powell, in shaping market expectations regarding monetary policy.
In summary, the expectation of an impending Federal Reserve interest rate cut has climbed to 74.5%, marking a notable shift in market sentiment. This potential reduction could provide support for riskier assets such as Bitcoin, which is approaching the $100,000 milestone. The upcoming statements from key Federal Reserve officials, particularly Jerome Powell, will likely play a critical role in confirming or dispelling market anticipations as the year draws to a close.
Original Source: www.tipranks.com
Post Comment