© Reuters
Investing.com – For the as for the financial markets in general, the trend of the next few days, even the next few weeks, will be determined by the meeting of the Fed on Wednesday.
Indeed, the US Federal Reserve is preparing to raise its rates again, continuing its fight against inflation at its highest in 40 years. But unlike previous meetings, where the market approached Fed decisions with near certainty, Wednesday’s meeting is more uncertain.
Prior to last week’s better-than-expected US inflation numbers, the odds of a 0.75% Fed rate hike were close to 100%. However, the worrying US CPI led the market to consider that the Fed could raise its rates not by 0.75% but by 1%.
At the time of writing, the investing.com Fed Rate Barometer shows that investors are factoring in a sizable 21% chance that the Fed will hike rates by 1%, a chance that was only 15% at the end of last week.
In other words, a Fed rate hike of “just 0.75%” on Wednesday would be a relief that could boost risk assets, including Bitcoin and other cryptocurrencies. And the higher the likelihood of a 1% rate hike at the time of the Fed’s decision, the greater the bullish impact on BTC of a rate hike limited to 0.75% could be.
As for a potential 1% rate hike, it would be a big hawkish surprise, unless something unexpected happens to influence expectations by Wednesday evening, and therefore would likely send BTC/USD plunging, just like risky assets in general.
>> To monitor the evolution of the probability of a rate hike by the Fed on Wednesday evening, regularly consult the