Bitcoin 
$105,236 prices stood above $63,400 as this article was prepared, marking a relatively good day for altcoins. With the anticipation of interest rate cuts, traders no longer fear the upcoming Fed meetings. This is promising news since, for the past two years, the market has witnessed declines ahead of these meetings; however, a reversal seems imminent. Fed member Bowman provided significant signals through recent statements. So, what does this mean for cryptocurrencies?
Fed Announcements and Cryptocurrencies
As we mentioned on Sunday, this week promises to be eventful for cryptocurrencies, with Fed members’ announcements expected to provide important market signals. After the recent 50 basis point cut, members are now clarifying their positions. While some emphasize the need for quicker and larger interest reductions, others argue that inflation is not yet under control.
Bowman expressed concerns about persistent upward risks to inflation. Key takeaways from her statements include:
- Signs of cooling in the labor market do not align with significant weakness in wages, spending, or GDP.
- Upward inflation risks remain evident due to supply chain fragility, fiscal policy, and mismatches in housing supply and demand.
- While policy adjustments are appropriate considering inflation progress, victory should not yet be declared.
- Core inflation continues to uncomfortably exceed the 2% target amidst ongoing growth in spending and wages.
- The rise in unemployment stems largely from slowing hiring and improving supply.
- Due to inflation still being above the target, I do not support the half-point cut; a more measured pace is preferable.
- There are still more jobs available than current workers.
- The neutral rate estimate is significantly higher than pre-pandemic levels, indicating that the policy is not as restrictive as it appears.
- As interest rates decline, considerable pent-up demand and cash present risks to reaching inflation targets.
As seen above, the nearest meeting is on November 7, with a prevailing expectation of a 25 basis point cut. However, we may witness shifts in this expectation as the meeting date approaches.
