Today the decision on interest rates from the Federal Open Market Committee (FOMC), the body in charge of monetary policy of the United States Federal Reserve (Fed), will be published. The announcement will be made at 2 p.m. Eastern Time (ET). The FOMC is expected to make a new cut of 25 basis points. If so, it will be the second in 2024. According to the CME Group firm's FedWatch tool, there is a 99% probability that the Fed will push for a 25-point cut. If these predictions come true, The annual interest rate will be 4.50%- 4.75% per year. Currently, it is 4.75%-5%.
Interest rates in the United States in each Fed decision and its forecast. Source: Investing. For Greg McBride, financial analyst at Bankrate, the US economy “is holding up remarkably well despite high interest rates, which will allow the Fed to cut rates by an increase of less than a quarter point at this meeting. , after having taken insurance in the form of a half-point rate cut in September.” In that framework, The focus is on how bitcoin (BTC) and cryptocurrencies will react. As BitcoinDynamic has explained, when the interest rate drops, the cost of borrowing is lower, and both investors and companies can take out loans to place them in assets considered risky to obtain greater profits. Likewise, it is important to note that the yield on Treasury bonds, known to be the safest investment in the world, also falls, and for that reason Investors move their holdings into stocks, BTC and cryptocurrencies.
However, it is worth clarifying that a larger-than-expected interest rate cut can be interpreted by the markets as a warning sign that the main financial power could be in trouble. path towards a recession of its economy. Given this panorama, A day of high volatility is expected for the digital currency created by Satoshi Nakamotowith the possibility of reaching a new all-time high (ATH) or, on the contrary, suffering a significant drop. At the time of publishing this note, its price is $74,960.
Bitcoin price so far in 2024. Source: TradingView. Regardless of what may happen immediately after the Fed's announcement, projections indicate that BTC could skyrocket in the medium term. For analysts at the Bernstein firm, the price of the digital asset will reach $200,000 in 2025. For his part, Iván Paz Chain, CEO of Trading Different, is also optimistic in the medium and long term and made it known to BitcoinDynamic during LABITCONF 2024. The businessman said: “I am calmly projecting bitcoin above $140,000.” It should be noted that once the Fed's decision is known, its head, Jerome Powell, will give a speech and answer questions from journalists. It is expected to detail what steps will be followed to the monetary policy of the United States, after Donald Trump was re-elected as president of that country.
On December 18, the Fed will meet again to analyze a final interest rate cut before the end of 2024.