25bp priced in: crypto braces for today’s FOMC with high expectations
The crypto sector stayed on edge on Wednesday as eyes remain on the Federal Reserve meeting later today, on December 10.
Digital asset investors are gearing up for a crucial macro development at the year-end. Notably, the Federal Reserve will deliver its decision on rate cuts today at 2 pm ET.
Pundits have priced in a 97% chance of a 25 basis point cut, a move that could herald much-anticipated broad-based recoveries.
Powell’s statement as a catalyst
While the decision is vital, investors will focus on the Fed chair’s comments. Notably, Jerome Powell will join the stage at 2:30 pm. His tone will likely trigger the real volatility.
For instance, hints of quantitative easing, balance sheet expansion, and continued rate cuts in the coming year can spark substantial bullish actions among risk assets.
Expectations remain high
Prediction markets confirm investor anticipation of a dovish outcome. On Polymarket, pundits have assigned a 97% probability of a 25 bp rate cut later today.
Elsewhere, Bitcoin ETFs turned positive yesterday, attracting $151 million in net inflows as of December 9 (SoSoValue data).
That followed significant withdrawals in the previous few sessions, indicating a revival of institutional confidence in BTC. Investors likely expect enhanced sentiments after today’s FOMC.
Bitcoin is trading at $91,800 after gaining nearly 2% the last 24 hours. The crypto market cap increased by 2% the past 24 hours to $3.14 trillion.
Indeed, market players are aggressively positioned for a rate cut. Nevertheless, disappointing comments from Powell could see the momentum dwindling faster. A cautious stance or uncertainty about future rate cuts would catalyze bearishness across markets.
What should traders do?
Popular crypto trader and analyst Michael van de Poppe has highlighted how crucial it is to navigate FOMC, stating:
FOMC meetings can be pretty tricky. The price action usually traps everyone before the actual move, so even if Bitcoin drops to $91K, I’m not putting too much weight on it.
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