While the leading cryptocurrency Bitcoin has been trading sideways between $60,000 and $65,000 for some time, investors in the cryptocurrency market are now focused on macroeconomic developments that could determine Bitcoin’s direction.
While macroeconomic developments are being closely monitored at this point, a noteworthy assessment of the FED came from Goldman Sachs Chief Economist Jan Hatzius.
A Goldman Sachs economist stated that the likelihood of the Fed raising interest rates in September is very low, which could be positive for Bitcoin.
Hatzius stated that the recently released weak economic data and the slowdown in inflation have made it more difficult for the Fed to raise interest rates again.
Markets are pricing the Fed as too hawkish!
According to Jan Hatzius’s assessment sent to clients, weakening retail sales in the U.S., softening employment data, and declining inflation significantly reduce the likelihood of a Fed interest rate hike in September.
At this point, Hatzius noted that, under the current economic outlook, inflation is more likely to continue improving rather than worsening for the remainder of the year.
The economist stated that, as things stand, the markets are still pricing in the Fed’s interest rate path as overly hawkish.
What Does This Mean for Bitcoin?
A Goldman Sachs economist notes that reduced concerns about further Fed interest rate hikes could improve market liquidity conditions, which could have a positive impact on risky assets, including Bitcoin.
However, Hatzius’s statement does not directly imply a bullish prediction for the Bitcoin price.
Hatzius’s $BTC assessment is based on the expectation that “the Fed will be less hawkish → the likelihood of interest rate hikes will decrease → creating a more favorable environment for $BTC in terms of liquidity/risk appetite.”
How are markets pricing in the September interest rate hike?
According to CME FedWatch data, markets are pricing in a 25 basis point rate hike by the Fed at its September meeting at approximately 30.6%.
Conversely, the probability of interest rates remaining at their current level is approximately 69.4%. At this point, the market is closely watching economic data from the US and statements from Fed officials.
*This is not investment advice.
Leave a Reply
You must be logged in to post a comment.