How it might affect the Bitcoin price
Fed watchers expect the US central bank to raise the federal funds rate by 0.25 or 0.50 percent.
The CME Fed Watch tool has gone up to forecast a 0.50 rate hike in the Fed Funds rate, with a 72% probability of at least a 0.25 increase at the next meeting.
The Yahoo Finance Live team reported Monday:
The Fed has a big decision to make at its next meeting on May 2-3. The probability of another increase of 0.25% is now 72%. And that’s according to the CME Fed watch tool.”
Bitcoin price and other crypto exchange markets will have the rest of April to digest the news, as well as stock, bond and other liquid financial markets.
Fed Funds rate increase expected until early May
The Fed is likely to raise interest rates due to a continued show of strength in the US labor markets. Jesse Wheeler of CNBC’s Morning Consult said:
That jobs report came in very strong and continues to show how strong and resilient the US labor market continues to be. I think the overall number, the 236,000 jobs, while a slowdown from the pace we’ve seen over the last six months, is still strong enough combined with the 3.5% unemployment rate to potentially justify another rate hike here in early May. “
The Federal Reserve’s twin mandates from Congress are to maximize US employment figures and stabilize dollar prices.
Wall Street Meanders, Bitcoin Price Rises
Wall Street ran through Monday’s flat, rising slightly higher throughout the day. Blue chip tech stocks struggled as Apple, Alphabet and Tesla shares fell on the day and dragged down the NASDAQ Composite:
“[The S&P 500 Index] rose 0.1% to 4,109.11. The Dow Jones Industrial Average added 101.23 points, or 0.3%, to 33,586.52. Meanwhile, the Nasdaq Composite was down 0.03% to close at 12,084.36.
Meanwhile, bitcoin prices rose around 7% on Monday as news of the May rate hike spread. The rally broke the $30,000 resistance and achieved a 10-month BTC high.
There is no certainty whether the rally was because of or in spite of the federal rate hike ahead. Higher interest rates can put a squeeze on the flow of liquidity that helps pump the bitcoin price higher along with other investment vehicles.
The stock market tends to fall in response to interest rate increases because it affects margins on investments. If stocks capitulate to a more hawkish financial regime in May, crypto prices could take a nosedive.
It’s also worth noting that BTC remains largely unaffected by the latest release of March CPI figures, holding firm above $30K as of this writing.
