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For the past few days, the crypto market has been on the rise again, well driven by its Bitcoin locomotive, which is outperforming the market. A few hours before the Fed’s FOMC meeting, all eyes are on the US central bank. For the first time in a year, the FED may not announce a rate hike. But this is not the most likely scenario.
Towards a 25 basis point hike?
According to the predictions of the platform CME Groupthe market is expecting a increase in key rates by 25 basis points. It is in any case the probabilities resulting from the analysis of the futures contracts of the Fed Funds. Tomorrow, the market therefore has an 81.9% chance of experiencing a rate hike that would take the main key rate to between 475 and 500 basis points. If the double rate hike is excluded, 18.1% of futures contracts suggest a policy of the status quo, which would be a first for almost a year.
But beyond the figures taken at an instant T, it is the evolution of these over time that could give more indications. A week ago, the indicators suggesting a 25 basis point hike in the key rate established a less clear-cut consensus. At 70% against 30% for those suggesting that the rate would remain unchanged. Be that as it may, it may well be that this meeting of the FED marks the last rate hike before a bottom.
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The crypto market is monitoring the evolution of the banking system!
If the war of the various central banks against inflation has punctuated the news around the crypto currenciesthe crypto market and Bitcoin rather watch today on the side of American banks. Because after the bankruptcy of SVB and the difficulties of Credit Suisse acquired by UBS, risky markets are shaking.
A situation that seems to benefit the digital asset market. If we have often correlated the equity market to the crypto market, the two markets have not really evolved in the same direction for a few weeks. Yesterday, the crypto market got a boost when the FED announced that it was partnering with 5 major central banks to ensure a steady and continuous flow of the US Dollar. The objective behind this approach remains to calm market volatility. This action bears witness to the current difficulties facing the banking system. As Stefan Rust, CEO of data aggregator Truflation, explains:
Faith in the fiat banking system is rapidly eroding and the only safe and portable alternative is bitcoin. The rapid rise in the price of bitcoin is a sign of fear that other problems lurk in the banking sector, especially since the fall of Credit Suisse […]. The bank withdrawals we are witnessing are also making it difficult to access gold, while the fear of inflation and hyperinflation in some countries is leading to a flight to BTC
As of this writing, Bitcoin remains clinging to the $28,000 thresholdup nearly 10% over the last 7 days.
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