We are not in excellent condition compared to the previous meeting, but we have not seen the feared type of announcements either. The reason behind Bitcoin’s price recovery after the drop was this cautious approach. Although Bitcoin fell to $109,000 levels during Powell’s speech, it filled the CME gap and executed the final long liquidations for a possible rise. What are the forecasts for November?
Fed’s Impact on Cryptocurrency
For the Fed to boost cryptocurrencies, it needs to lower interest rates and expand its balance sheet, making money more accessible. However, the situation isn’t as straightforward as it seems. The Fed is on a trajectory, which is not a path that reaches a destination in a few months. For instance, while rising unemployment calls for lower rates, the halt in inflation decline suggests that rates need to stay stable or even rise.
Fed’s current stance implies that the rise of cryptocurrencies won’t be as easy as past monetary easing cycles allowed. Are cryptocurrencies significantly disadvantaged in the current environment? Absolutely not. Inflation risks are more moderate compared to previous months. The Fed has distanced itself from the belief that tariffs have drastic inflation consequences, hence we do not hear talk of “raising rates if necessary.”
Moreover, while job cuts are not at an unprecedented level, hiring has considerably weakened, as confirmed by Powell recently. Thus, a scenario where job cuts significantly increase unemployment looms ahead, akin to the fearmongering of tariffs causing inflation spikes. However, this scenario leads to monetary easing rather than tightening.
While Fed doesn’t provide the optimal scenario for cryptocurrencies, it does offer a relatively favorable one. Speculation of a December rate cut remains low, reliant on hopes for recovery signals in employment. Post the closure, delayed 2-month employment reports will surface, potentially benefiting cryptocurrencies, spurring rapid growth if favorable.
On the positive side, while a 75 basis point cut was a bullish scenario for this year, we have already gotten a 50 basis point cut with 6 weeks and notable potential ahead. Recalling hawkish forecasts by Fed members predicting one or two cuts offers insight into why these days look good.
November Expectations for Cryptocurrencies
The recent Fed meeting was positive, not perfect, as explained earlier. Within an hour, trillion-dollar tech giants will release their earnings reports, and outcomes that meet or exceed expectations will support cryptocurrencies.
Tomorrow, about two hours after the US market opens, Trump will speak with Xi. Positive statements will further boost cryptocurrencies. Upcoming earnings reports and the end of November 1st retaliations will enhance positive sentiment for crypto. What early indicators can you watch? ETF flows data near daily candle closes will provide insights. We should see an appetite here.
We are approaching days where news-driven price movements are crucial for altcoins. Hence, the news section will be beneficial, making it easier to get updates. A live news feed and access to summaries and details gives you an advantage.