Fed Set to Release Crucial Comments for Markets: Impact on Crypto

Cryptocurrencies gained momentum at the beginning of Monday’s trading, buoyed by positive movements in the equity markets, reflecting a growing sense of optimism ahead of crucial central bank decisions.

Investors are gearing up for the release of significant economic data this week, along with the Federal Reserve’s July meeting scheduled from Tuesday to Wednesday, where updates on interest rates and new monetary policy guidance are anticipated.

While it is widely expected that interest rates will remain unchanged, market participants are keenly awaiting indications regarding the timing and magnitude of potential rate cuts this year. The central bank’s policy guidance and the subsequent press conference led by Fed Chairman Jerome Powell will be closely monitored.

On Friday, the personal consumption expenditures (PCE) price index, which serves as the Fed’s favored inflation measure, met expectations with a 0.1% increase from the previous month and a 2.5% rise year-over-year in June.

Traders are now pricing in a strong likelihood of the first interest rate cut happening in September. Although Fed officials have consistently noted that they require more evidence of inflation steadily returning to the 2% target before considering rate cuts, Powell suggested earlier this month that the Fed might not wait for inflation to reach this target before making adjustments.

### Crypto Market Response

In response to these developments, Bitcoin reached its highest level since mid-June, hitting $69,868 during early trading today as optimism surrounding potential Federal Reserve interest rate cuts boosted investor confidence. At the time of this update, Bitcoin was trading at $69,520, reflecting a 2.65% increase in the last 24 hours. Several other cryptocurrencies also saw positive gains, with increases ranging from 2% to 4%. Notably, a Bitcoin spinoff surged as much as 15%.

The upcoming Fed meeting is likely to establish the groundwork for a rate-cutting cycle, a scenario that is generally favorable for cryptocurrencies, helping to elevate market sentiment.

Currently, Bitcoin remains approximately $4,400 below its all-time high of nearly $74,000 recorded in March. Additionally, inflows into select U.S. exchange-traded funds have contributed to Bitcoin’s value appreciation this year.