How this could affect the price of Bitcoin

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Fed watchers expect the US central bank to raise the federal funds rate by 0.25 or 0.50%.

The CME Fed Watch tool has forecast a 0.50 hike in Fed Funds interest rates, with a 72% probability of at least a 0.25 hike at the next meeting.

The Yahoo Finance Live team reported on Monday:

The Fed has a big decision to make at its next meeting on May 2-3. The probability of another 0.25% increase is now 72%. And that’s according to the CME Fed monitoring tool.

The bitcoin price and other crypto exchange markets will have the rest of April to digest the news, along with stocks, bonds, and other liquid financial markets.

Fed funds rate hike set to start in May

The Fed is likely to hike rates on a sustained show of strength in US labor markets. CNBC Morning Consult’s Jesse Wheeler said:

This jobs report has been very strong and continues to show how strong and resilient the US labor market remains. I think that headline figure, the 236,000 jobs, although a slowdown from the pace seen over the past six months, is still high enough, coupled with that 3.5% unemployment figure, to potentially justify a another rate hike here in early May.

The Federal Reserve’s dual mandate from Congress is to maximize US employment numbers and stabilize dollar prices.

The twists and turns of Wall Street, Bitcoin price surges

Wall Street coasted Monday flat, slightly higher during the day. Blue chip tech stocks struggled with Apple, Alphabet and Tesla shares slipping during the day and pushing down the NASDAQ Composite:

[The S&P 500 Index] rose 0.1% to 4,109.11. The Dow Jones Industrial Average added 101.23 points, or 0.3%, to 33,586.52. Meanwhile, the Nasdaq Composite edged down 0.03% to close at 12,084.36.

Meanwhile, the price of bitcoin jumped some 7% on Monday as news of May’s interest rate hike spread. The rally broke resistance at $30,000 and tumbled 10-month BTC.

It is impossible to say for sure whether the rally was due to or despite the upcoming federal interest rate hike. Higher interest rates could put pressure on the cash flow that helps push up the price of bitcoin along with other investment assets.

The stock market tends to fall in response to rate hikes because it affects margins on investments. If stocks capitulate to a more hawkish financial regime in May, crypto prices could take it with them.

It’s also worth noting that BTC remains largely unfazed by the latest release of CPI numbers for March, remaining firmly above $30,000, at the time of this writing.

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