Coin Edition -
- Bitcoin investors are paying attention to the interest rate decision by the FOMC.
- Most investors expect the FOMC to increase interest rates.
- Investors will interpret Powell’s speech based on the extent of hawkishness.
Bitcoin investors are paying attention to the interest rate decision by the FOMC as one of the main signals that could determine the next price direction. More than just the figures, the speech by the Federal Reserve Chair, Jerome Powell, and the associated sentiments could tell whether Bitcoin would climb back above $30,000 or continue with the price correction.
The Federal Open Market Committee (FOMC), the Fed body tasked with setting interest rates and making monetary policies, meets today and tomorrow, May 2-3, 2023. After several rumors emanating from the speeches of Fed officials in recent weeks, investors anticipate another rate hike.
Rate hikes have become common in the US financial sector following significant setbacks, especially in the first quarter of 2023. Silicon Valley Bank’s collapse and the debt ceiling disaster marked some significant challenges confronting the policymakers. As a result, the FOMC has embraced rate hikes as a model to curb inflation, at least as a temporary measure.
As it stands, most investors expect the FOMC to increase interest rates. The Fed’s Chair will present the meeting’s report in a prepared speech, which he will read during a press conference by tomorrow, May 3, 2023. However, the more impactful aspect of the presentation comes in the second part, when he would answer questions from the press.
The questions often lead to unscripted answers that create market volatility as listeners try to make deductions from Powell’s responses. Investors will interpret tomorrow’s speech based on the extent of Powell’s hawkishness over the economy.
If Powell presents a hawkish appeal to the meeting’s outcome and questions raised, the US dollar might strengthen in the interim, pushing Bitcoin toward lower support. Otherwise, the Bitcoin price could reverse and resume its upward movement. However, if the committee dishes out a surprise by keeping the rates the same or reducing them, Bitcoin could experience significant volatility that would lead to more losses, pushing it deeper into a correction.
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