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Assessing Fed rate cut odds and its impact on Bitcoin

  • The CME FedWatch Tool has indicated a low chance of a cut.
  • Senator Warren’s letter hinted at Bitcoin’s bullish scenario.

With the Federal Open Market Committee (FOMC) assembly scheduled for the 12th of June, the crypto group is abuzz with hypothesis about its impact on market dynamics.

Current indications counsel that rates of interest will probably stay unchanged. In truth, the CME FedWatch Tool indicated at a mere 0.6% chance of a quarter-point rate cut on the assembly.

CME FedWatch Tool

Source: CME FedWatch Tool

In different information, Senator Elizabeth Warren wrote a letter to Federal Reserve Chair Jerome Powell on the 10th of June, urging for curiosity rate cuts. The letter urged, 

Senator Warren's letter

Source: Warren.senate.gov

Impact on the crypto market

According to CoinMarketCap, the worldwide crypto market was down by 0.45% during the last day on the time of writing, reflecting FUD (Fear, Uncertainty, and Doubt).

Moreover, on the 11th of June, Bitcoin [BTC] spot exchange-traded funds (ETFs) skilled vital outflows of $200.4 million, with Grayscale Bitcoin Trust ETF (GBTC) main the pack as per Farside Investors.

Bitcoin ETF outflow

Source: Farside Investors

Here, it’s necessary to notice that rate cuts typically result in bullish momentum for risk-on property like Bitcoin and cryptocurrency. So, Senator Warren’s enchantment may find yourself serving to Bitcoin and the crypto market basically.

Inflation stays sticky

Needless to say, the inflation rate within the US has been a matter of concern for fairly a while.

According to the Bureau of Labor Statistics and the Department of Commerce, the Federal Reserve’s most popular inflation measure, the Personal Consumption Expenditures (PCE) index, has proven sooner enchancment in comparison with the Consumer Price Index (CPI).

However, each indicators point out persistent inflation.

Bureau of Labor Statistics and Department of Commerce

Source: Bureau of Labor Statistics and Department of Commerce

Optimism persists

Despite considerations, Michaël van de Poppe took to X (previously Twitter) and famous,

“It’s important to note that price action can be trappy. If the rate decision is unchanged, the markets might have an initial response downwards, but usually, the real move happens at a later point.” 

Further elaborating on his standpoint, he stated, 

“Bitcoin rallied by more than ten percent after previous FOMC events. Ethereum rallied by more than twenty percent after previous FOMC events. Both of them corrected by the same amount before the event, so a repricing back upwards seems reasonable to expect.”  

AMBCrypto’s evaluation of Santiment information additional confirmed this, revealing a major spike in social quantity for Bitcoin and Ethereum [ETH]. 

ETH-BTC-Santiment

Source: Santiment

Hence, as everybody waits for the Fed’s resolution on rates of interest, it might be fascinating to see if historical past would repeat itself or if the market will undergo the impact of the FOMC assembly.

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