- Cryptocurrency markets have remained relatively stable before the Fed’s announcement, with minor fluctuations in Bitcoin, Ethereum, Solana, and XRP.
- Stablecoins like USDC and USDT may respond positively to a rate hike pause, potentially increasing market liquidity. At the same time, the Crypto Fear and Greed Indexes indicate investor uncertainty as the announcement approaches.
Today’s Federal Reserve announcement regarding federal fund interest rates is expected to result in a dovish outcome, with a rate hike pause going into October and November. The Fed is determined to bring inflation to a stable annual rate of 2%. Despite the recent 3.8% uptick in unemployment during August, investors are confident that rates will stay at 5.25-5.50%, according to the CME FedWatch Tool.
How Have Crypto Markets Reacted?
Cryptocurrency prices have remained unchanged amid this speculation leading up to the announcement. In the last 24 hours, BTC has moved +0.2%, reflecting its steady upward price trend of the previous week. Ethereum has responded negatively with a decline of -1.3% in the last 24 hours, a -0.1% decline in the last hour alone. Additionally, Solana is up +1.8%, and XRP is up +1.5% in the previous 24 hours.
Stablecoins have not reacted to the rate hike pause speculation. However, following the meeting, if Fed chairman Jerome Powell does announce a pause on rate hikes, USDC and USDT will react positively as more liquidity will be available in the market.
Conclusion
Crypto Fear and Greed Indexes stand neutral, possibly reflecting investor angst as the announcement approaches. If interest rates are hiked by another 25 basis points, bringing rates up to nearly 5.75%, the crypto market can be expected to see a downtrend in price over the coming days, but only time will tell.
