After more than two and a half years of aggressive monetary tightening, the chairman of the US Federal Reserve has decided Jerome Powell This is widely expected to indicate an impending shift towards monetary policy easing.
What happened: Powell’s highly anticipated speech at the Kansas City Fed’s Jackson Hole Economic Symposium is scheduled for Friday at 4 p.m. ET. The event has historically been used by Fed chairs, including Powell, to announce major changes to the central bank’s policy, Coindesk reported.
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Market participants have been preparing for this shift for some time. Traders have already priced in a 100% probability that rates will be cut by at least 25 basis points at the upcoming Fed meeting in September.
This sentiment was further reinforced by the release of the FOMC minutes from the Fed’s July policy meeting, which showed that an “overwhelming majority” of participants believe a rate cut in September is “likely appropriate.”
Analysts expect Powell to not only confirm the September rate cut but also take a cautious stance on further easing.
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This could mean that the Fed cuts rates by just 25 basis points in September, signaling to markets that sustained cuts are not expected in the near future.
In the run-up to this expected easing cycle, US financial markets have remained largely optimistic.
Despite a brief decline from mid-July to early August, the S&P 500 is currently trading just 1% below its early July high, while the Nasdaq is about 4% below its peak.
Gold has also risen sharply, reaching a record high of $2,566 earlier this week.
The bond market is also optimistic, with the yield on the 10-year US Treasury note falling to a low of 3.77%.
Also read: According to Cathie Wood, you can become a millionaire if you own 6 Ethereum (ETH), This is why it could be true.
Why it’s important: However, Bitcoin (CRYPTO: BTC) is struggling to gain a foothold.
While Bitcoin has recovered from the early August sell-off that briefly saw its price dip below $50,000, the price is still significantly below its all-time high of around $73,500 reached in March.
This disappointing performance is notable given other positive factors in the crypto space, including rising institutional interest and continued inflows into spot ETFs.
Additionally, Bitcoin could benefit from recent regulatory developments.
According to a report by ABC News, crypto-friendly Robert F. Kennedy Jr. is considering withdrawing from the presidential race on Friday and endorsing the GOP candidate Donald Trumpwho is also known for his positive attitude towards cryptocurrencies.
On the Democratic side, a senior official said Kamala HarrisThe campaign suggested that a Harris administration would be more supportive of the crypto industry than the current Biden administration.
The upcoming Benzinga Future of Digital Assets event on November 19 will be particularly relevant in this regard.
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This article If Jerome Powell Announces Rate Cuts on Friday, What Does That Mean for Crypto? originally appeared on Benzinga.com
