The U.S. Federal Reserve is poised to make crucial policy decisions this week, potentially affecting Bitcoin's future trajectory. Despite robust jobs and economic data, inflation persists above the Fed's 2% target. The upcoming Federal Reserve Open Markets Committee meeting will address whether to maintain or adjust the federal funds rate, a decision with significant implications for Bitcoin and broader financial markets.
Erin Browne from PIMCO suggests a cautious outlook, with investors initially expecting a 1.27% interest rate cut next year, but recent job reports indicating strong wage growth might delay these cuts to Q4. Experts agree a recession is unlikely in the U.S., but global risks remain.
The situation is complex, with inflation metrics remaining above target and the economy potentially slowing. Strategas economist Dan Rissmiller warns of the challenges in achieving a soft-landing, considering factors like low unemployment and higher interest rates. Additionally, the recent re-entry of workers post-strikes and an inverted yield curve have muddled job numbers, with some predicting a late-2024 recession.
Bitcoin's outlook is intertwined with these developments. A delay in rate cuts could spur a rally if Bitcoin stays above $40,000. Moreover, Bitcoin could gain independently if the U.S. Securities and Exchange Commission approves exchange-traded funds (ETFs) starting January. The anticipated Bitcoin halving in late April, reducing Bitcoin's emission rate, could further boost its value as a deflationary asset and an alternative to fiat currency, particularly in a low bond yield environment.
Disclaimer: Please note that the information provided in this article is based on the referenced research articles. It is essential to conduct further research and analysis before making any investment decisions. The cryptocurrency market is highly volatile, and investors should exercise caution and consult with financial professionals before engaging in cryptocurrency trading or investment activities.