Investors expect the Federal Open Market Committee (FOMC) to continue its aggressive approach to monetary policy tightening at its meeting to be held on June 14-15. So, how will this affect Bitcoin (BTC), Shiba Inu (SHIB), Ethereum (ETH) and other cryptocurrencies?
What is expected in the FED’s rate hike?
According to expectations, the US Federal Reserve (FED) will likely increase interest rates by 50 basis points (bps) in a row and continue to reduce assets on its balance sheet of approximately $9 trillion. The last time the Fed made two (non-consecutive) 50 basis point rate hikes was in mid-1994. As we reported on Kriptokoin.com, the Fed has been walking a tightrope in recent months, trying to reduce inflation levels from the highest level in decades without putting the US economy into a recession. The S&P 500 is down 13.6 percent so far amid growing concerns that the Fed will not be able to make a “soft landing” for the economy.
Recent economic data suggest that the FOMC’s tightening measures up to this point have not stopped US economic growth and there are some positive signs that inflation may finally peak. The Fed is also expected to adhere to its previously announced plan to allow $30 billion in Treasury securities and $17.5 billion in mortgage-backed securities (MBS) each month starting in June. The central bank said the monthly balance sheet reduction would increase to $60 billion in Treasury and $35 billion a month in MBS from September.
What to expect for Bitcoin and altcoins?
Altcoin Daily technical analyst Jebb researched what will happen in Bitcoin after the FED’s move. According to Jebb’s expectation, the lowest price of BTC will be $ 22,500. He says the reason behind this is the historical movement of the 200-week simple moving average. in 2014, 2018 and early 2019; Finally, he points out that there are huge bottoms at the beginning of 2020. “At one point, that was Bitcoin’s lowest point,” he says.
The analyst states that the current situation is a bull trap. Due to macro factors, he says right now is not a good time to fully invest in Bitcoin. According to the analyst, if you buy Bitcoin for $31,000, it is likely to drop to $22,000 and lose 30-35 percent of its value. However, if you think about what the lowest level will be in five years, you may regret that you bought it at $31,000 instead of $22,000.
Finally, it is eagerly awaited whether the actions of the FED will trigger the rise. According to the expert, the supply of US dollars has essentially doubled in the last two years. The pandemic was the other factor pushing the markets. Jerome Powell is scheduled to speak on June 15, and a further 50 basis point rate hike is expected to be announced. According to Jebb, Bitcoin will struggle in 2022 because so many people cling to their money so tightly that they can’t afford to invest in what they have. As a result, if things start to look a little better, if not this year, you will see Bitcoin take off like a rocket.
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