It looks like the Federal Reserve is in something of a giving mood. The agency has announced that with inflation in America coming to a sudden standstill, members are looking to scale back rate hike plans in the coming months.
The Federal Reserve Could Stop Hiking Rates
Initially, the Federal Reserve was planning to hold another big meeting in September. Now that the month has arrived, several bitcoin enthusiasts were probably shaking in their boots, as every time the Federal Reserve has chosen to hike rates, bitcoin’s price has seemingly been affected, and not always in a positive way. In fact, since these meetings began several months ago, bitcoin has lost more than 60 percent from its all-time high of $68,000 per unit last November.
The good news, however, is that now the organization says inflation is reaching a peak in the United States. Many of us at home are still feeling the financial crunch, but on paper, it appears things are seemingly coming to a halt. This might be good in the sense that the Fed will now seek to end its ongoing array of rate hikes, which means bitcoin could seemingly get a break in the coming months.
Yuya Hasegawa – a bitcoin and crypto market analyst at Bit Bank – explained in a recent interview:
A decline in inflation could mean that the Fed may cut back on their rate hike from the September meeting. Of course, the market is not yet completely convinced of it until they see the July CPI, which is slated to be announced next Wednesday, but inflation will likely decline in July due to lower oil prices, and bitcoin will likely benefit from the expectation for a slower rate hike.
These rate hikes have been continuing for some time as the U.S. has experienced its worst inflation run under Joe Biden. Having recently shot beyond nine percent, many are feeling the burn when they walk into the market to buy eggs, milk, and bread or when they’re at the pump looking to fill their car with gas. Prices are beyond what anyone thought was possible, and bitcoin – like many of the world’s assets – has been hit hard.
Will Bitcoin Come Back?
Cumberland – a Chicago-based market maker – also threw its two cents into the mix, saying:
If the Fed does indeed blink, and backs off increasing rates at its projected pace, the market would likely take it as a positive catalyst. It’s fascinating that even following a severe selloff, at a moment when the market motto had been risk-off everything, the average respondent was still extremely bullish. In our view, this isn’t that outlandish. The shape of the forward curve is already predicting a chance at rate cuts in 2023.
Despite the positive sentiment, it’s easy to notice we’re not quite out of the woods yet.