The upcoming Federal Reserve (Fed) rate decision, scheduled for Wednesday, is unlikely to bring significant surprises, according to cryptocurrency traders. The Fed is expected to maintain its data-dependent stance and keep interest rates steady. This cautious approach has implications for Bitcoin’s price volatility.
Bitcoin’s Suppressed Volatility
Bitcoin’s recent volatility levels have mirrored the calmness seen in U.S. stock and bond markets. Crypto traders anticipate this low volatility regime to persist even after the Fed’s rate decision.
The Fed is expected to hold its benchmark borrowing cost within the range of 5.25% to 5.5%. Analysts believe that the central bank will emphasize its commitment to data-dependent decision-making, suggesting that rates will remain elevated while economic indicators are monitored.
Low Probability of Surprises
Market experts argue that the Fed is unlikely to provide hawkish or dovish surprises during this meeting. This, coupled with the central bank’s consistent focus on inflation and employment as determinants of its future rate actions, supports the idea of a low volatility event for the crypto and traditional markets.
Bitcoin Options Reflecting Expectations
Bitcoin options expiring shortly after the Fed decision indicate subdued expectations. Traders anticipate a mere 2.8% price movement in Bitcoin, suggesting little impact from Chairman Powell’s comments. In 2023, Bitcoin’s response to FOMC meetings has been relatively muted, with only modest price fluctuations observed.
The consensus among cryptocurrency traders is that the Fed’s rate decision is unlikely to disrupt the current low volatility environment in Bitcoin. The central bank’s cautious and data-driven approach appears set to continue.