Cryptocurrency investors are retreating by reducing the risk of their holdings ahead of tomorrow's May Consumer Price Index (CPI) report and Federal Open Market Committee (FOMC) meeting, according to an update from hedge fund QCP.
While investors eagerly await the announcement of the CPI and the outcome of the FOMC meeting, markets are in risk-off mode. This month's FOMC meeting is particularly important as the Fed will release the Dot Plot, a tool that informs the market about the number of interest rate cuts it projects for the rest of 2024.
Despite the short-term negatives, QCP claims that this could be a good opportunity to accumulate coins. They cite bullish events like the eventual launch of the ETH spot ETF and the ongoing verbal spats between President Biden and former President Trump to win crypto votes as reasons for optimism.
The FOMC will announce its next interest rate decision tomorrow. Following a hot employment report, there's a strong possibility that interest rates will remain steady. The CME FedWatch Tool, which estimates the likelihood of the Fed changing interest rates based on market forecasts, shows a 99.4% chance of interest rates remaining steady as of Monday.
While the FOMC predicted three interest rate cuts this year in its December projections, FED President Jerome Powell reiterated that nothing was certain throughout the year. The country's central bank is willing to wait as long as necessary until it is confident the economy has cooled sufficiently.
*This is not investment advice.