US Fed interest rate preview: Two scenarios for Bitcoin and Ethereum prices


  • Bitcoin and Ethereum prices are close to key psychological levels, $34,400 and $1,800, ahead of the Federal Reserve’s interest rate decision. 
  • Cryptocurrencies in the top 10 by market capitalization noted an increase in their prices in the week leading up to the Fed’s decision.
  • Traders foresee a 98.2% probability that the US Federal Reserve will leave interest rates unchanged on Wednesday.

Bitcoin price rallied throughout October 2023, marking another profitable month for BTC holders. The upcoming US Federal Reserve interest rate decision has the potential to make or break Bitcoin’s price rally.

Altcoins like Ethereum will probably follow Bitcoin’s coattails. A vast majority of market participants expect the interest rate to remain unchanged and a small percentage anticipate a rate cut by the US central bank. 

Also read: Federal Reserve Preview: Powell set to lift US Dollar by leaving door open to more hikes

US Fed interest rate preview: Two scenarios for Bitcoin and cryptocurrency prices

Scenario 1: US Fed leaves rates unchanged

According to the CME Fed Watch Tool, there is a 98% probability that the US Ccentral bank will leave interest rates unchanged on November 1. In September 2023, Bitcoin price noted no stark movements as the Fed left interest rates unchanged. A similar outcome is expected, in response to the Federal Reserve’s November 1 decision. 

CME Fed Watch tool and expectation of interest rate hike

CME Fed Watch tool and expectation of interest rate hike

Bitcoin price could witness short-term volatility, with BTC hovering close to the $34,400 level. BTC is likely to momentarily retrace its weekly gains of 4.33%, a recovery in the asset’s price could follow soon after. 

Bitcoin’s rally is largely driven by the anticipation of a spot BTC ETF approval by the US financial regulator Securities and Exchange Commission (SEC). The SEC’s decision could therefore influence BTC price directly, as opposed to unchanged interest rates.

Scenario 2: US Fed cuts interest rates

Market participants believe that there is a 1.8% probability of an interest rate cut. In the event of a rate cut, risk assets like Bitcoin and altcoins are expected to rally. Typically, a rate cut makes it cheaper to borrow funds and engage in leveraging risk assets like Bitcoin for gains. An increase in demand and inflow of funds to the asset likely drive prices higher. 

It is important to note that the interest rate cut is highly unlikely. Investors are focused on Fed Chair Jerome Powell’s speech to identify whether more interest rate hikes are on the horizon. 

Expert analysis on likelihood of further rate hikes

Yohay Elam, lead analyst at FXStreet analyzed the Fed’s interest rate decision and the possibility of future rate hikes in his post here. Elam notes that the Federal Reserve's overnight rate stands at a range of 5.25%-5.50%, above both measures of inflation. The US Central bank has slowed the pace of its rate hikes and settled for one interest rate increase in the past three meetings.

While market participants expect another “no change” decision from the US Fed, the Central bank left room for another hike in 2023. Elam says,

“The bank's dot plot showed a target of 5.6% by year-end, leaving the door open to another move. With no new forecasts at this juncture, Fed Chair Jerome Powell will likely insist on another move, leaving his options open. One reason to do that is the buoyant jobs market.”

Bitcoin and Ethereum prices hover at crucial levels

Bitcoin and Ethereum, the two largest cryptocurrencies by market capitalization are hovering around crucial levels, ahead of the bank’s decision on Wednesday. Bitcoin price sustained above $34,400 while Ethereum is trading above its $1,800 psychological level.

 

 

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


Recommended Content

Editors’ Picks

Top 3 Price Prediction Bitcoin, Ethereum, Ripple: BTC declines as resistance emerges near all-time high

Top 3 Price Prediction Bitcoin, Ethereum, Ripple: BTC declines as resistance emerges near all-time high

Bitcoin and Ethereum are approaching their key support levels, and a sustained close below these marks could lead to further declines. 

More Cryptocurrencies News
TON set to launch synthetic Bitcoin to boost its DeFi solutions

TON set to launch synthetic Bitcoin to boost its DeFi solutions

TON revealed its plan on Thursday to launch a synthetic Bitcoin token on its blockchain, allowing users to trade, stake, and earn yield using BTC. Following the announcement, TON is down over 3%.

More Ton News
Maker Price Forecast: MKR could stage 40% rally

Maker Price Forecast: MKR could stage 40% rally

MakerDAO is up 2% on Thursday and could be set for a 40% rise in the coming weeks if it successfully maintains an extended move above the descending trendline of a falling wedge. On-chain data also supports the bullish outlook after a four-month-long decline.

More MakerDAO News
USDT market cap crosses $120 billion as stablecoins continue their uptrend

USDT market cap crosses $120 billion as stablecoins continue their uptrend

The stablecoin market cap continued its uptrend in October, characterized by USDT reaching a $120 billion market cap, according to a CCData report on Thursday. This indicates that investors are preparing liquidity to fuel more demand.

More USDT News
Bitcoin: New all-time high at $78,900 looks feasible

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.

Read full analysis
Best Forex Brokers with Low Spreads

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.

Read More

BTC

ETH

XRP