Federal Reserve’s Interest Rate Decisions and Their Impact on Crypto Markets

This year, everyone agrees that the Federal Reserve will start interest rate cuts, but the extent of these cuts is under debate. The market remains overly optimistic while the Fed continues to be extremely cautious. Fed members who met their end-of-year targets are aiming for a 75 basis point cut for the current year.

Macro Data and Cryptocurrencies

Today, we saw the release of three critical pieces of data 1 hour before the opening of the US stock markets. These were the Unemployment, Non-Farm Employment, and Average Hourly Earnings data. All three are significant indicators related to the state of the labor force and their impact on inflation. The unemployment data was high, the NFE data was low, and the Average Hourly Earnings were reported below expectations, which was favorable for cryptocurrencies.

• US Unemployment Rate Reported: 3.7% (Expectation: 3.8% Previous: 3.7%)
• Non-Farm Employment Reported: 216k (Expectation: 175K Previous: 199K)
• Average Hourly Earnings Reported: 4.1% (Expectation: 3.9% Previous: 4%)

The data showed that the Unemployment rate was relatively good, but the Employment and Average Hourly Earnings data were poor. Wages have increased more than expected, which will make the Fed’s fight against inflation more challenging. Worse still, the Fed is targeting slower interest rate cuts than market expectations, so they will likely use this data to make hawkish statements. Markets may feel the anxiety of these macro indicators until the meeting at the end of the month.