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Next week will likely be another challenging period for cryptocurrencies, with investors feeling anxious about potential purchases. After the peak in the Federal Reserve’s interest rate hikes in the latter half of last year, the impact of meetings on the market had weakened. However, the upcoming decision on May 1 and subsequent statements could trigger volatility.
May 1 Federal Reserve Meeting
We will learn the interest rate decision following the Federal Reserve meeting on Wednesday, May 1. Half an hour later, Powell will take the microphone to deliver his intended messages. The current outlook suggests a 97% probability that interest rates will remain unchanged. The FedWatch has already zeroed out the probability of an increase. However, the strong expectation for a reduction seen in previous meetings has also been zeroed out.
It appears that the Fed might make its first interest rate cut at the September 18 meeting. The September meeting is the third of the year, and if the Fed wants to achieve its previously announced 75bp reduction target this year, it must make consecutive cuts in three meetings. However, there’s a concern: wouldn’t consecutive cuts further fuel inflation? Won’t the Fed wait to observe the outcomes of the cuts? More importantly, how will the Fed escape the dilemma it has found itself in after today’s PCE and yesterday’s GDP data?
After the meetings in May, June, and July, the September meeting will take place. If the Fed begins cutting rates in September, the US economy might take further hits. However, if it starts cutting rates earlier, the 2% inflation target might have to be postponed for years. Thus, the May 1 meeting is crucial for clarifying the path ahead, likely leading to increased volatility.
Bitcoin Price Levels
There is a half-billion dollar short position waiting to be liquidated in the $65,000 region. This price area, concentrated by investors confident in a downturn, could provide the necessary support for an accelerated breakout rally. On the other hand, according to Denis Baca, a financial analyst and product manager at Zivoe, while Bitcoin appears to have formed strong support in the $60,000 region, a drop could occur before reaching new highs.
“Historically, as we enter May, we see Bitcoin weakening to retest the 20-week SMA support, which would place Bitcoin at $56,000. I think such a move would be healthy before rising further. These kinds of drops can offer solid buying opportunities before the next climb to record levels.”
