The cryptocurrency market has seen a positive start to the year 2023, with Bitcoin (BTC) rallying by more than 40%. However, many are now worried that this recent rally could be pulled back after the Federal Reserve’s (Fed) FOMC meeting on Wednesday, Feb. 1. The markets have already started to react as assets dip, with Bitcoin (BTC) witnessing its most significant dip since November with the fall of the popular exchange, FTX.
In 5 hours, the Fed will be holding its two-day FOMC meeting, at 19:00 UTC, it will make its interest rate decision. Analysts are predicting Powell will adhere to his hawkish script at his press conference. The CME estimates that there is a 98.7% chance that interest rates will increase by 25 basis points which means that the 25 basis point increase is already priced in. In addition, interest rate futures indicate that the Fed’s run of rate increases could be stopped in June. If Powell recognizes the recent drop in inflation and economic growth, it could give the cryptocurrency market a boost.
Investors will be closely watching Powell’s remarks today about the strength of the economy, the employment market, the macro recovery, and more. In addition to the interest rate increase, a short-term increase might be anticipated to occur if he suggests future softening actions. It will be interesting to see how the cryptocurrency market reacts to the FOMC meeting later today.