Accommodative position of the American Fed in the FOMC? ; Is the bitcoin price bullish or bearish?

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Tech companies posted higher-than-expected profits amid growing concerns about the financial health of First Republic Bank. Although the huge decline in regional bank stock prices catapulted a jump in the price of Bitcoin on Wednesday, volatility remains elevated. Meanwhile, the US Federal Reserve is expected to announce its interest rate decision when the Federal Open Market Committee (FOMC) meets from May 1-2, 2023. As a result, the crypto market could remain volatile in the days ahead, as financial markets expect the central bank to finally show signs of easing monetary policy.

Also Read: US Senator Ted Cruz Reveals Bitcoin Investment Strategy, Declares Ultra-Bullish Outlook

The majority of S&P 500 companies beat expectations, thanks to cost-cutting measures such as mass layoffs. For example, Mark Zuckerberg led Meta, which is also heavily invested in the Web 3.0 space with Metaverse ambitions, laid off 10,000 employees in 2022 in addition to layoff plans for another 21,000 through November 2023. This has led to a growing number of high-income professionals wanting unemployment. benefits, which the Fed will be looking at closely.

End of Fed rate hikes?

According to Fundstrat’s adviser on Yahoo, the upcoming FOMC meeting will affect the latest rate hike moves due to the need to ease financial conditions. The massive increase in unemployment claims for employees with salaries above $200,000 could trigger what could be a dovish hike. A 25 basis point hike at the Fed’s May meeting could be followed by an easing of financial restrictions, advisers said. Meanwhile, an overwhelming majority of respondents to the CME tool FedWatch expect the central bank to raise interest rates by 0.25%, from the current target rate of 4.75 to 5%.

On the other hand, the US Dollar Index (DXY) is currently at a three-month low at 101.41. Therefore, based on the inverse correlation between the DXY price and the Bitcoin price, the major cryptocurrency could be on course for another rise ahead of the Fed meeting, especially if Fed Chairman Jerome Powell , expresses a dovish stance after a 25 basis point hike.

Also read: Binances’ new initiative on Polygon aims to woo US customers amid regulatory scrutiny

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