The week started with Federal Reserve Chair Jerome Powell addressing economic policy at the Washington D.C. Economic Club. Following last week’s mixed inflation data, Powell’s comments are highly anticipated by market participants for indications on future U.S. fiscal policies. The broader financial community is keen to understand how these policies might impact various sectors, including the cryptocurrency market.
FOMC Meeting and Market Expectations
The Federal Open Market Committee (FOMC) is scheduled to meet at the end of this month, with no interest rate cut expected. This meeting is crucial for investors in risky assets who are awaiting a more relaxed policy stance, which might be more evident during the September FOMC meeting. The Kobeissi Letter highlighted the significant attention on upcoming earnings reports from major corporations, noting that the market is closely monitoring the Fed and the beginning of the earnings season.
Data from CME Group’s FedWatch Tool indicates a 94.3% likelihood of a rate cut in September as of mid-July, while the probability for this month remains low at 4.7%. Chief Market Strategist Charlie Bilello of Creative Planning stated that the market anticipates 2-3 Fed rate cuts before the year ends and an additional four rate cuts in 2025.
What’s Happening in the Bitcoin Ecosystem?
Bitcoin‘s ecosystem is experiencing noticeable changes in price behavior. After three consecutive declines, mining difficulty is expected to recover independently. This recovery, contingent on maintaining price strength, anticipates a 4% increase by mid-July, which is encouraging for those monitoring miner health.
Data from MiningPoolStats shows that the hashrate is nearing all-time highs, which supports a positive outlook for the future. Comparisons of 30-day and 60-day moving hash rate changes suggest that the miner capitulation phase might conclude soon. The most recent capitulation phase occurred in August 2023, signaling a potential long-term price drop below $30,000 for Bitcoin.
Key Takeaways
– The FOMC’s next meeting might not include an interest rate cut, but September’s meeting is crucial.
– Market anticipates multiple Fed rate cuts by the end of the year and in 2025.
– Bitcoin’s mining difficulty and hashrate are showing signs of recovery, indicating a bullish trend.
– The end of the current miner capitulation phase could stabilize Bitcoin prices above $30,000.
These developments collectively offer a nuanced perspective on how fiscal policies and economic indicators are intertwined with both traditional and digital financial ecosystems.