Fed’s interest rate cuts and the crypto market. Since Bitcoin and other leading cryptocurrencies are significantly affected by macroeconomic indicators, the Fed’s interest rate decision, following the inflation rates announced in the USA, is being watched carefully in the cryptocurrency markets as well as in the global economy.
Latest US inflation data shows that the Consumer Price Index (CPI) increased by 3.1% annually in November. This rate can be considered as an increase limited to the decrease in energy costs. The Fed’s decisions on interest rates are heavily influenced by such inflation indicators. The Fed may increase interest rates to keep inflation under control and ensure economic stability. However, this may change the risk perception of investors in the cryptocurrency markets, causing them to turn to less risky investment options.
The Federal Open Market Committee (FOMC), which will meet today, is not expected to make any changes to interest rates. According to the CME FedWatch tool, there is a 98.4% chance that interest rates will be held steady. This could create uncertainty in cryptocurrency markets or support current price levels.
The important thing for cryptocurrency investors is to take a balanced and strategic approach to short-term market movements. Macroeconomic developments, such as the Fed’s interest rate decisions, may cause instant fluctuations in the markets. However, focusing on long-term investment goals and the fundamental values of cryptocurrencies can be investors’ most solid guide during such periods of volatility.
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