This week is of paramount importance for the US financial landscape, with significant implications for the cryptocurrency sector. The US Federal Reserve is poised to announce a crucial decision concerning a 25 basis points (bps) rate cut on December 18. This anticipated move marks the second rate cut of 2024, and its effects are expected to reverberate through the crypto market. Here’s a comprehensive look at the situation.
Federal Reserve’s Interest Rate Decision: What You Should Know
Back in September, the Federal Reserve initiated the first rate cut of 2024, adjusting the interest rate target to a range of 4.75% to 5%. This decision was primarily driven by a faltering job market, evidenced by the Initial Jobless Claims index, which saw a decrease from 260,000 to 242,000 in early October.
Now, as December 18 approaches, the Federal Reserve is anticipated to announce another significant 25bps interest rate cut. The Chicago Mercantile Exchange (CME) has assigned a probability of at least 93.4% to this rate cut scenario, highlighting the market’s expectations and the potential ripple effects across various financial sectors.
Impact of Fed Rate Cut on Cryptos
Since the initial Federal rate cut in September, the cryptocurrency market has experienced remarkable growth, with an overall increase of 71.77%. Notably, the market capitalization of cryptocurrencies outside the top ten has surged by an impressive 87.16%. These figures underscore the dynamic nature of the crypto market in response to macroeconomic policies.
In October and November, Bitcoin demonstrated robust growth of +11.2% and +37.4% respectively. Ethereum, despite a slight dip of -3.16% in October, bounced back with a remarkable 47.4% increase in November. Experts are optimistic that the forthcoming rate cut will continue to positively influence the crypto sector. Over the past 24 hours alone, Bitcoin and Ethereum have seen gains of 2.3% and 1.9%, respectively, reflecting the market’s responsiveness to economic signals.
Prime Economic Events Crypto Investors Should Never Miss
Beyond the Federal Reserve’s activities, December 19 is a date of significance, with the release of the US GDP Growth Rate Final and the US Core PCE Prices Final. The GDP growth rate, which was 1.6% in the first quarter and rose to 3% in the second, is projected to stabilize around the 2.8% mark in the upcoming release, according to consensus estimates and TEForecast.
Similarly, the PCE Prices index, which started the year at 3.7% in the first quarter and fell to 2.8% in the second, is expected to decrease further to 2.1%. This anticipated drop aligns with TEForecast projections, indicating a potential easing of inflationary pressures.
In conclusion, this week is pivotal for the US economy and the cryptocurrency market alike. The Federal Reserve’s rate decision, coupled with critical economic indicators such as GDP and PCE Prices, will play a crucial role in shaping market trajectories. Investors and market participants should remain vigilant, as these developments could herald significant shifts in both traditional and digital finance landscapes.
