13.06.2024
Mirjan Hipolito
Cryptocurrency and stock expert
13.06.2024

​Fed meetings: Their impact on crypto, stocks and other assets

​Fed meetings: Their impact on crypto, stocks and other assets ​Fed meetings: Their impact on crypto, stocks and other assets

These meetings, where the Federal Reserve decides on interest rates and monetary policy, have far-reaching effects on various financial markets, including stocks and cryptocurrencies.

The Federal Open Market Committee (FOMC) is an arm of the Federal Reserve (Fed). Its decisions on interest rates can lead to substantial volatility in crypto markets. For instance, aggressive rate hikes to combat inflation typically result in downward pressure on risk assets such as cryptocurrencies. Conversely, more dovish stances from the Fed can boost market optimism, leading to potential price increases in crypto assets.

The phenomenon of "Fear of Missing Out" (FOMO) is particularly pronounced around Fed meetings, according to CryptoDaily. In the lead-up to these events, speculative behavior often drives prices up as traders rush to capitalize on anticipated market movements. However, this can result in inflated prices followed by corrections once the actual policy decisions are made public.

Recent trends indicate that if inflation continues to stabilize, the Fed might pause or even reverse its rate hikes. This potential shift in policy could provide relief to the currently struggling crypto market and invigorate investor confidence. However, crypto traders are advised to remain cautious, focusing on fundamental analysis rather than succumbing to market hype driven by social media and speculative commentary.

As anticipated, the FOMC on June 12 maintained its interest rate range at 5.25%-5.50%. Its economic outlook now indicates that only one 25 basis point rate cut is anticipated this year.

However, the Summary of Economic Projections (SEP) for June indicated that FOMC participants have revised their inflation expectations for 2024 and 2025. According to Fed Chair, Jerome Powell, this was due to the lack of progress on inflation seen in Q1 2024 and concerns about base effects in year-on-year inflation readings later this year.

The Fed's official schedule indicates that the next round of FOMC meetings is planned for July 30-31. Crypto investors are advised to monitor developments closely. Staying informed and avoiding impulsive trading decisions will be crucial for navigating the volatility and leveraging the opportunities presented by major market events.

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