Bitcoin Hover Near $26,000 Ahead of Key Fed Policy Announcement – Here’s How the BTC Price Might React
The Bitcoin (BTC) price is hovering close to $26,000, well within its recent intra-day ranges in the lead-up to Wednesday’s key US Federal Reserve policy announcement.
The US central bank is expected to pause its cycle of aggressive interest rate hikes that began last March and have seen the bank lift rates by 500 bps (to 5.0-5.25%) in the last 10 meetings.
The Fed will also release updated economic projections and a new “dot plot” alongside the usual policy statement and post-meeting press conference with Fed Chair Jerome Powell.
The dot plot is a summary of forecasts from Fed policymakers as to where they think interest rates will be in the coming years.
Given the two additional forward-looking components that detail Fed policymakers’ expectations about the economic and monetary policy outlook, Wednesday’s meeting is being touted as having the potential to trigger significant volatility in crypto markets.
Bitcoin has been trending lower since mid-April’s yearly highs in the $31,000s, weighed recently by 1) markets pulling back on rate cuts bets for the second half of 2023 and, more recently, 2) uncertainty regarding the US regulatory outlook as the US Securities and Exchange Commission (SEC) takes action against Coinbase and Binance.
And many analysts expect Wednesday’s Fed meeting to be a “hawkish pause”, which could worsen bitcoin’s short-term headwinds.
While the Fed is expected to leave rates unchanged, the bank is expected to leave the door open to further rate hikes, which could bolster expectations for a July hike (which is already the market’s base case).
The CME’s Fed Watch Tool currently prices around a 65% of 25 bps (or more) worth of rate hikes by July.
Meanwhile, the economic projections are likely to show that the
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