Markets are anticipating a 50 basis point cut, but the Fed is expected to implement a 25 basis point reduction. The economic turbulence is significant and the uncertainty is at a discouraging level. For cryptocurrency investors, a historic period is about to commence in the coming hours, likely characterized by volatility similar to previous rate cuts.
Fed Rate Decision and Crypto
According to CME’s FedWatch tool, the probability of a 50 basis point rate cut stands at 61%. Analyst Illia Otychenko emphasizes that the focus should be on the Fed’s forward guidance rather than the rate cuts themselves. Although markets expect a 50 basis point cut, Jerome Powell’s remarks on future monetary policy actions will likely trigger the primary volatility.
“Without clear guidance moving forward, institutional investors may reduce their risk, which could harm Bitcoin’s upward momentum.”
The Puell Multiple, a crucial indicator for Bitcoin 
$98,589, is currently below 0.5, signaling a buying opportunity. However, uncertainty from the Fed has rendered on-chain indicators less meaningful. The recent historic low of ETH against BTC also indicates a strong flight from risk.
In the medium to long term, if a recession is avoided, a reduction in rates could signal bullish prospects for cryptocurrencies. However, given the ongoing weakness in investors’ risk appetite, short-term expectations do not appear optimistic.
Historic Fed Meeting
After four years, markets are divided in their views entering the first rate cut, with a 50 basis point cut probability priced at 60%, the most uncertain rate seen in over 15 years. Nevertheless, only 9 out of 114 economists surveyed by Bloomberg expect a 50 basis point cut, while 113 firmly predict a 25 basis point reduction.
Wells Fargo advises investors to look beyond the debate of 25bps versus 50bps and prioritize the Fed’s forward guidance instead. They argue that neither outcome would be shocking. Wells Fargo also recommends monitoring the 2-year U.S. Treasury yield as a key indicator.
In just a few hours, the historical decision will be made, and members will share their three-year interest rate expectations. We will provide updates on the details from this event.
