FED’s Upcoming Interest Rate Decision: What’s In Store For Crypto Market on May 1st

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Today, the crypto market has experienced declines as Bitcoin dipped below $63,000, and Ethereum has struggled to maintain its position above $3,200. Other major altcoins like Solana, XRP, and Cardano also faced losses. This diversity in performance highlights the varied nature of the crypto market, where different digital assets react differently to market conditions.

Altcoins in the Sell or Buy zone? 

The Federal Reserve’s impending interest rate decision scheduled for May 1 is a key factor influencing the market sentiment. Analysts widely anticipate that the Fed will maintain interest rates at their current levels, with a probability of 95.6%. Moreover, pressure comes with weaker-than-expected GDP data, indicating a potential economic slowdown. Persistent inflation continues, as signaled by higher Core PCE figures. This poses challenges for the Federal Reserve to manage higher inflation rates.

This double whammy of sluggish growth and surging inflation paints a troubling picture—a classic sign of stagflation, where an economy faces stagnant growth alongside rising prices.

Current Market Outlook

Many experts claim that the US economy is at stagflation which presents a unique challenge for the Federal Reserve (FED). Traditionally, during economic slowdowns, the FED cuts rates to spur growth. On the flip side, when inflation rises, it raises rates to keep prices in check.

However, policymakers find themselves in uncharted territory in the stormy waters of stagflation, where both conditions collide. Initial forecasts of multiple interest rate cuts have been revised, with expectations now leaning towards only one rate cut in 2024.

Bitcoin’s fluctuations remain stagnant, suggesting a shift in market sentiment. Bitcoin’s prices is also stable, dropping from 70% to 50%. This reduction in volatility suggests a potential stabilization in prices or a period of consolidation following recent fluctuations. Meanwhile, Ethereum’s risk reversals indicate concerns about possible delays in the SEC’s approval of spot Ether ETFs, contributing to downward pressure on its price.

Plus, Ethereum’s risk reversals indicate dark clouds looming over the SEC’s approval of the spot Ether ETF. These uncertainties raise doubts about the market’s trajectory, prompting investors to look for potential catalysts.

One such catalyst could be the launch of Bitcoin and Ethereum spot ETFs in Hong Kong, which is anticipated to attract institutional capital from Asia into the crypto market. This event is eagerly awaited as a key driver for market growth and could bring new cash flow.

However, EGRAG CRYPTO suggests reconsidering a bearish outlook on Altcoins, pointing out a historical pattern indicating sideways consolidation after a range retest breakout. They anticipate two significant upward movements ahead and advise holding tight while considering dollar-cost averaging sells.