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- Bitcoin reached above $27,000 for the first time since Grayscale beat the SEC in court last month.
- The Fed is widely expected to pause interest rate increases on Wednesday.
Happy Monday!
It’s a big week for macroeconomic events, with the focal point of the US Federal Reserve’s interest rate decision on Wednesday. Bitcoin is back above $27,000 and altcoins, led by Solana, are leading crypto prices higher.
Let’s dig in.
Fed up
Despite US inflation coming in hotter-than-expected in August, the Fed is still widely expected to pause rate increases this week.
The probability of a pause is 99%, according to the CME’s FedWatch dashboard. The tool analyses the probability of changes to the central bank’s interest rate as implied by 30-Day Fed Funds futures pricing data.
While the interest rate increases might be priced in, the higher inflation data released last week could affect the central bank’s policymakers.
August’s inflation data may affect the Fed’s projections, and scrutiny may “add to volatility more broadly in the next two weeks,” David Duong, head of institutional research at Coinbase, said on Friday.
The current target rate in the US is 5.25% to 5.5%. The Fed’s projections in June showed the median rate rising to 5.625% this year. Analysts at investment bank Nomura are among those seeing no change this week.
The central bank would then have the option to hike to again before the end of the year — making Wednesday’s decision a “hawkish skip,” according to some analysts.
The Fed funds futures were pricing in a 50% probability of a hike in November on Friday, Duong said. The odds of a hike in two months have since decreased to closer to 30%.
The target rate is expected to fall by 2024 as the Fed begins to cut. Officials in June projected a median of 4.625% rate by the fourth quarter of next year.
Rate cuts will be beneficial Bitcoin and risk assets, Hunting Hill Digital founder Adam Guren told DL News last month.
Crypto market movers
- Bitcoin rose 2% over the past day, trading around $27,200. The leading cryptocurrency by market capitalisation is now up 5.7% in the last week.
- Ethereum gained 0.9% as it trades just below $1,650. Last week marked one year since The Merge and its upgrade to proof-of-stake.
- Altcoins continue to lead price increases in crypto markets. Solana’s SOL added 2.8%, Binance-affiliated BNB gained 2.1%, and Chainlink’s LINK soared over 9%.
What we’re reading
- Mark Cuban on how he lost $870k to crypto scam — ‘They must have been watching’ — DL News
- Anti-CBDC grafitti shows crypto culture wars have reached Wales — DL News
- How Base plans to stem slowdown after $400m rewards program frenzy — DL News
Adam Morgan McCarthy is DL News’ London-based Markets Correspondent. Got a tip? Reach out at adam@dlnews.com.