The Fed is about to trigger more Bitcoin volatility
Bitcoin traders, brace yourselves! The Federal Reserve’s upcoming rate decisions could lead to significant swings in Bitcoin’s trajectory, making the coming months a rollercoaster for crypto enthusiasts. Here’s why:
The conversation around Bitcoin’s recent price movements has become increasingly focused on macroeconomic factors, especially the Federal Reserve’s policies. Craig Shapiro, founder of The Alethea Narrative, and Roundtable anchor Rob Nelson, shed light on how these factors could play out. According to Shapiro, “The biggest thing that’s driving Bitcoin currently is macro momentum, this economic momentum and what is the Fed going to be doing at the next meeting.”
Shapiro emphasizes that Bitcoin was the standout performer on the market last Friday, highlighting the cryptocurrency’s sensitivity to broader economic signals. The Fed is poised to make a crucial decision on interest rates in its next policy meeting, expected in a few weeks. The anticipation of rate cuts, especially given the strong economic data, is driving speculation.
Currently, the market is pricing in several rate cuts over the next few meetings, with expectations for up to four cuts in the next three meetings and eight in the next six. Shapiro points out, “The market’s already pricing in four rate cuts in the next three meetings and eight rate cuts in the next six meetings.” This is a reflection of the growing belief that the Fed will act aggressively to stimulate the economy.
The upcoming jobs report will play a pivotal role in determining whether the Fed will opt for a substantial 50-basis point cut or stick with a standard 25-basis point move. Shapiro advises caution, acknowledging that “there is a reasonable chance that we could see a much choppier risk-taking environment between now and the election.”
Despite this volatility, Shapiro remains optimistic about Bitcoin’s prospects. He predicts that as the Fed continues its aggressive cutting cycle into the next year, Bitcoin could emerge stronger. “As we push through the end of this year and move into next year with a much more aggressive cutting cycle, I think that’s the environment where Bitcoin’s really going to thrive,” he concludes.
