Bitcoin (BTC) experienced a slight recovery today and its price rose above $43,000. This revival is attributed to the potential pause in interest rate increases by the FED, which is scheduled to meet at the end of January.
The FED's meeting, which will take place in just 15 days, will determine the future direction of the US Federal Reserve's monetary policy. According to the CME FedWatch tool, current forecasts show a 97.4% chance that the Fed borrowing rate will remain steady within its current target range of 5.25%-5.50%.
Analysts from Bitfinex have suggested that a pause in interest rate hikes this January could provide much-needed relief for the strained banking sector and stagnant stock market. According to analysts, not increasing interest rates could potentially provide significant support to Bitcoin.
Analysts also drew attention to the FED's Summary of Economic Forecasts. The FED is expected to reduce the policy rate by approximately 75 basis points throughout 2024.
The potential interest rate cut is seen as a strategic move to strengthen the economy, especially if inflation remains consistent with the Fed's stability goal. But Bitfinex analysts warn that the timing and scale of these rate cuts are critical. Early or excessive reductions can reignite inflation, while delays or minimal reductions can hinder economic growth.
*This is not investment advice.