The Federal Reserve meeting on Wednesday, led by Kevin Warsh, has become a difficult test for Bitcoin supporters due to the failure of the Clarity Act in the Senate. The meeting will be held at ٢ PM Eastern Time, followed by Warsh's press conference ٣٠ minutes later.
Impact on the Cryptocurrency Market
Before the interest rate announcement, Bitcoin, the largest cryptocurrency by market value, is trading at $٧٥,٨٠٠, reflecting an approximately ٣% decrease in the past ٢٤ hours. The digital asset market is generally under bearish pressure, with tokens like JUP, XLM, and ICP each declining by about ١٠%.
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Market Expectations and Their Consequences
Financial markets have almost fully priced in a ٢٥ basis point increase in interest rates, which will raise the Federal Reserve's target rate range to ٣.٧٥%-٤%. Almost all major investment banks also expect at least one more rate hike by the end of this year.
This combination of market expectations complicates the situation for Warsh. According to experts, the main narrative is not that interest rates will rise today, but rather the expectation of tighter policies throughout this year. In this case, Warsh may face challenges in delivering a message that aligns with the current aggressive pricing in the market.
If Warsh fails to meet market expectations, the dollar may weaken, and long-term yields may rise. While rising yields are typically seen as a negative sign for non-yielding assets like Bitcoin and gold, analysts emphasize that the reason for this increase is important.
If the Federal Reserve raises rates without providing aggressive guidance, investors may conclude that the current monetary policy is still too accommodative. In this case, market participants may begin to price in more aggressive hikes in the coming months.
In both scenarios, yields are expected to rise for reasons other than positive economic forecasts, meaning that non-yielding assets like gold and Bitcoin may not be affected.
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