- The US Federal is likely to raise its benchmark lending rate on July 26, as the monetary policy meeting concludes on Wednesday.
- Bitcoin price is range bound below the psychological barrier at $30,000 as the rate hike looms on market participants.
- The CME FedWatch tool is forecasting a 98.9% probability of a quarter point increase in interest rates.
Bitcoin price is ranging below $30,000, a key psychological barrier for the asset, ahead of the US Federal Reserve’s rate decision on Wednesday. Crypto market participants are closely watching the Fed’s next move to predict whether risk assets will get derailed from their rally in the ongoing alt season in July.
Also read: What can crypto traders expect from Fed’s interest-rate decision?
Rate decision likely to influence Bitcoin, altcoin prices
Market participants are confident of the US Federal Reserve’s 0.25 percentage point rate hike on Wednesday. The rate hike has been baked in for a while as further increases were already signaled during the US central bank's last meeting in June, when policy makers decided to hold rates steady.
Projections in June showed a base case of two additional rate hikes before the end of 2023. Fed Chair Jerome Powell talked about “additional policy firming,” implying June was just a mere pause before further rate hikes. In his July 13 speech, Fed Governor Christopher Waller said,
I see two more 25-basis-point hikes in the target range over the four remaining meetings this year as necessary to keep inflation moving toward our target.
The CME Group Fedwatch tool places the probability of a 25 basis point hike in July at 98.9%, at the time of writing.
CME Fedwatch tool estimates for July 26 Fed meeting
Based on the Fed’s June projections, two committee members favor no further rate hikes, four favor just one more and twelve are seeking two or more hikes before the end of 2023. A consensus is therefore unlikely in the current Fed meeting and market participants are watching the decision closely with some balls in the air.
An interest rate hike is likely to influence Bitcoin and risk asset prices negatively, triggering a drawdown in BTC price and slowing the asset’s recovery to the $30,000 level. Moreover, July 2023 is the alt season, according to the index by Blockchaincenter.net. A decline in crypto prices could wipe out alt season gains for altcoins ranking in top 50 cryptocurrencies by market capitalization.
AI-based prediction suggests Bitcoin price could tank after rate hike
According to Chain of Demand (CoD), an analytics platform that uses Artificial Intelligence (AI) to predict Bitcoin price action, the estimate for BTC price after Wednesday’s meeting is bearish. The team at CoD identified that Open Interest on Binance Perp Futures for BTC is a great leading indicator for BTC price action the day after the FOMC meeting.
T+1 BTC Price Estimate for the upcoming FOMC Meeting: Bearish
— Chain of Demand (@ChainofDemandAI) July 25, 2023
Confidence: High (90%)
A thread:
This pattern was accurate for 10 out of 11 previous FOMC meetings and based on the current tracking of Open Interest, Bitcoin price is likely to correct on Thursday.
More on Bitcoin price targets: What can crypto traders expect from Fed’s interest-rate decision?
Like this article? Help us with some feedback by answering this survey:
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
Bitcoin Price Forecast: Analysts anticipate increased volatility as the US presidential election looms
Bitcoin price teased its all-time high of $73,777 last week but declined to trade below $69,000 on Monday. Analysts suggest that market volatility is expected to rise as the US presidential election approaches.
Litecoin poised for double-digit decline after breaking ascending trendline
Litecoin breaks and closes below an ascending trendline, signaling a change in market structure. On-chain metrics paint a bearish picture, as LTC’s dormant wallets are active, and the NPL indicator shows a negative spike.
Top 3 Price Prediction Bitcoin, Ethereum, Ripple: BTC, ETH and XRP decline ahead of US elections
Bitcoin (BTC), Ethereum (ETH), and Ripple (XRP) all faced resistance at crucial levels ahead of the US Elections, leading to a price decline. As of Monday, they neared key support levels, and a firm close below these marks could signal further declines.
21Shares files S-1 for XRP ETF amid ongoing tension between Ripple and SEC
21Shares filed an S-1 registration with the Securities and Exchange Commission (SEC) on Friday for an XRP exchange-traded fund (ETF). While the chance of approval is slim with the current SEC administration, the landscape could change after the upcoming elections.
Bitcoin: New all-time high at $78,900 looks feasible
Bitcoin price declines over 2% this week, but the bounce from a key technical level on the weekly chart signals chances of hitting a new all-time high in the short term. US spot Bitcoin ETFs posted $596 million in inflows until Thursday despite the increased profit-taking activity.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.