The Fed Expected to Announce Rate Hike Decision
The U.S. Federal Reserve’s Federal Open Market Committee (FOMC) is set to announce its rate hike decision on Wednesday. It is anticipated that the FOMC will maintain the target range for the federal funds rate at 5.25%-5.5%, which is currently a 22-year high.
Fed Chair Jerome Powell has indicated that the committee will assess the impact of recent rate hikes as they near the end of their campaign. While inflation remains above the Fed’s 2% target, the FOMC is expected to announce a “pause” for the second time this year. However, if inflation rises, there is still a possibility of another 25 bps interest rate increase at the end of the year.
Inflation and Job Market Concerns
The annual PCE rate, which is the Fed’s preferred inflation gauge, rose to 3.3% in July from 3% in June. Additionally, there has been a cooling in the job market, with an increase in the unemployment rate.
Wall Street giants such as JPMorgan, Goldman Sachs, and Morgan Stanley are predicting a “pause” in September. However, rising oil prices pose a threat of pushing inflation higher once again. Some analysts like Raymond James and Mizuho expect a 25 bps hike.
“We expect the Fed will keep rates unchanged at tomorrow’s FOMC meeting, while retaining a tightening bias. We think the 2023 median dot will continue to show one further hike this year, while there is a risk that the longer-run dot is revised higher.”
Probability of Pause and Impact on BTC Price
The CME FedWatch Tool shows a 99% probability of a pause at the next FOMC meeting in September. The U.S. dollar index (DXY) remains strong, which could continue to put pressure on the price of Bitcoin (BTC).
Bitcoin Price Movement
In the past 24 hours, BTC price has increased by 1% and is currently trading at $27,144. However, the price remains volatile as traders await the Fed’s monetary policy decision. Bitcoin has seen a 5% climb in the past week, with expectations of a significant upside momentum after the FOMC announcement.
#Bitcoin | A bull run is often characterized by increased on-chain activity!
This can be spotted when the monthly average of new wallets (red) surpasses the yearly average (blue), which indicates strengthened network fundamentals and increased use.
Notice that $BTC on-chainโฆ pic.twitter.com/QBssde81Tf
โ Ali (@ali_charts) September 19, 2023
Hot Take: Bitcoin’s Bullish Sentiment
The upcoming FOMC announcement is expected to bring back a much-needed bullish sentiment for Bitcoin. Traders are hopeful for an increase in BTC price as technical chart patterns improve. Additionally, increased on-chain activity is often a sign of a bull run, which further supports the positive outlook for Bitcoin.
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