Investors are scrutinizing signals from the US Federal Reserve (Fed), whose monetary policy could trigger a bear market. Despite hopes for rate cuts in 2024, Fed Chairman Jerome Powell's latest statement dampened those expectations. This could pressure financial markets, particularly risky assets like bitcoin.
Fed's Decisions and Bitcoin
The Fed plays a crucial role in balancing financial markets. Jerome Powell emphasized that the institution is in a wait-and-see mode, delaying any interest rate cut forecasts. This stance could heavily impact risky asset markets. Economist Timothy Peterson believes that such inertia could lead to a 17% drop in the Nasdaq over seven months, with bitcoin following a similar trajectory down to $57,000.
Divergent Bitcoin Forecasts
While Peterson highlights a possible correction below $70,000, other experts are optimistic. BitMEX co-founder Arthur Hayes anticipates a correction phase between $70,000 and $75,000, followed by a surge to $250,000 by year's end. He argues that a return to monetary easing could benefit bitcoin significantly. Meanwhile, Blockware Solutions proposes that even in a bearish scenario, bitcoin could reach $150,000 in 2025 if the Fed reverses its policy.
Future Impact of Fed on Cryptocurrencies
This range of predictions underscores the Fed's critical role for crypto investors, as any signal—restrictive or accommodating—will have immediate market repercussions. Bitcoin's volatility could increase in the coming months, making each Fed decision vital for crypto trajectories.
The current market uncertainty highlights the significance of Fed decisions for cryptocurrencies. Investors must be prepared for potential corrections or subsequent price surges depending on monetary policy directions.
