The Fed is preparing to decide on rates: the crypto market in sweat!

In just two days, on May 1, the Federal Open Market Committee will meet to decide the fate of interest rates. While financial analysts are feverishly monitoring developments in bond markets in anticipation of this event, the crypto community is also holding its breath. Indeed, she fears that bitcoin and other altcoins will buckle under pressure.

Crucial Fed decisions ahead

Since June 2023, Jerome Powell predicted that US Federal Reserve key rates would remain high for “several years”. Based on the lack of improvement in the inflationary situation, the Fed president cast doubt on a possible downward revision of rates. An uncertainty which weighs heavily on bitcoin and other cryptos, subject to constant pressure.

This week, the United States is preparing for momentous economic events, with the top of the list the highly anticipated Federal Reserve interest rate decision. All eyes are on this deadline, as crypto analysts predict it is almost certain that the Fed keeps rates at their current level, with a probability of 95.6%. A decision which could well play a crucial role in the future direction of the global economy, underlines CoinGap.

However, dark clouds are gathering on the horizon. Recent US economic data has cast a veil of uncertainty, with GDP lower than expected, pointing to a possible slowdown in the economy. Meanwhile, benchmark PCE index figures revealed persistent inflationraising tricky questions for the Fed.

While some fear the possibility of a stagflation, characterized by anemic economic growth and high inflation, these fears remain speculative for the moment. Nonetheless, the market is responding to this uncertainty, with revised expectations now predicting onlyjust one interest rate cut by 2024in marked contrast to the more optimistic initial forecasts.

Meanwhile, on the cryptocurrency front, volatility is rife. THE bitcoin has recorded a new correction of 2.2% last weekend, while altcoins came under even more intense selling pressure, with the ten largest alternative cryptos (ETH, TON, BNB, ADA, SOL, etc.) experiencing corrections of up to 10%.

Bitcoin and altcoins under pressure

The recent crypto market update hinted signs of bitcoin volatility compressing from 70% to 50%. At the same time, fears of further delays regarding Ethereum ETFs are looming. This atmosphere of uncertainty raises a burning question: is this a change in trend or simply a pause?

All eyes are on Hong Kong where Bitcoin and Ethereum ETF trading will begin soon. Palpable anticipation invades crypto market players, who hope to see an opening for Asian institutional capital.