The cryptocurrency market started the day positively, fueled by news of a ceasefire and upcoming Fed announcements.
Fed Announcements
In recent days, three Fed members mentioned potential rate cuts in July. These statements underscore the importance of the upcoming PCE data, which will inform decisions on rate adjustments amid weakening job growth and subdued inflation.
"Conditions in the labor market have remained robust. Payroll employment gains averaged 124,000 monthly over the first five months of the year. The unemployment rate stood at 4.2% in May, remaining low and narrow throughout the past year. Wage growth continues to be moderate but remains above inflation. Overall, a broad set of indicators suggests the labor market conditions are generally balanced and consistent with maximum employment." – Powell.
Implications for Cryptocurrencies
Powell did not signal a rate cut, aligning with recent announcements from three Fed members. This suggests that if a rate cut does not occur in July, it might indicate a decision not reached unanimously within the FOMC.
There is an 83% expectation that interest rates will remain unchanged when announced in 36 days. Forecasts for a rate cut in September exceed 80%. FedWatch data indicates we might see two rate cuts before the year’s end, heavily influenced by trade developments.
Future Prospects
Long-term trade agreements by the U.S. with China, the EU, India, and other countries, maintaining a minimal long-term fixed tariff rate, will provide strong signals for rate cuts. Therefore, volatility in the cryptocurrency market may change based on these economic conditions.
The strong momentum in the cryptocurrency market amidst Fed news highlights the sensitivity of investors to changes in macroeconomic policy and expectations regarding interest rates.
