In This Article:
-
Bitcoin is trading above $60,000 as traders await announcements from the FOMC
-
The CoinDesk 20 (CD20), a measure of market performance, is up 1.1%
Bitcoin {{BTC}} held above $60,000 early Wednesday, after a brief tumble below the level in late U.S. hours, as traders around the globe await a U.S. Federal Open Market Committee (FOMC) meeting where chair Jerome Powell is widely expected to announce rate cuts.
BTC traded just over $60,300 at press time, up nearly 4% in the past 24 hours to extend weekly gains over 7%. Major tokens showed mixed movements, with ether {{ETH}}, BNB Chain’s BNB and dogecoin {{DOGE}} rising under 1% and xrp {{XRP}}, Cardano’s ADA and Toncoin (TON) showing slight losses.
The broad-based CoinDesk 20 (CD20), an index tracking the largest tokens, rose 1.1%.
The FOMC is expected to release its statement and interest rate decision at 2 p.m. Eastern Time later Wednesday. A pivot to lower borrowing costs has historically buoyed bullish sentiment among traders as cheap access to money spurts growth in riskier sectors.
Fed funds data shows traders pricing in a 67% chance of a cut that will bring rates in the 4.5%-5% range from the current two-decade high between 5.25% and 5.5%. A larger cut would see rates drop by half a percentage point, instead of the traditional quarter-point cut.
Traders on Polymarket are split between the possibility of a 100 basis points (bps) and 125 bps cut, giving both scenarios a 31% chance of happening.
However, some say a 50 bps cut could trigger a sell-off as it signals a worrying sign for the economy.
“The size of the rate cut matters because it could lead to different market reactions. While a 25 bps cut would likely boost markets, a 50 bps cut might signal recession concerns, potentially triggering a deeper correction in risk assets,” said Alice Liu, research lead at CoinMarketCap, in an email to CoinDesk.
"If the rate cut is seen as a response to weakening economic conditions, it could raise concerns about future earnings growth, potentially leading to a short-term pullback in BTC and other crypto assets,” Liu said, adding that Q4 could bring a shift toward more stability after the U.S. elections.
“Historically, Q4 has often been a strong period for Bitcoin, and on average BTC has yielded 90.33% price increase in Q4 for the past 10 years,” she noted.
Speaking to Bloomberg at the Token 2049 conference in Singapore, SkyBridge Capital founder Anthony Scaramucci predicts bitcoin will hit a record high on rate cuts and more clear rules in the U.S. around crypto. Scaramucci foresees the possibility of a 150 bps rate cut at the next Fed meeting.