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The US Federal Reserve (FED) kept its policy rate steady at its meeting on Wednesday, in line with expectations. This decision, which coincided with analyst estimates and CME FedWatch data, caused markets to turn their eyes to September.
Bitcoin Sideways: Fed Rate Cut Hopes Shift to September, Seasonal Pressures Continue
FED Chairman Jerome Powell stated in his post-meeting press conference that there was a “downward trend” in inflation.
But he noted there was still room to keep rates high because of strong employment and consumer spending.
“The Fed has no immediate plans to cut interest rates. The 'wait-and-see' approach continues and it has become clear that the first cut will not occur before September,” said Valentin Fournier, chief analyst at BRN.
According to the CME FedWatch tool, the probability of a rate cut at the FOMC meeting on September 17 is priced in at 62%.
Following the Fed’s decision, there was no significant movement in the US stock and futures markets. Similarly, limited price movements were seen in cryptocurrencies. Bitcoin was trading sideways at $105,000, while Ethereum and XRP also failed to find a significant direction.
Could Demand for Bitcoin Increase?
David Hernandez, Crypto Investment Expert at 21Shares, stated that the Fed’s policy stance could create a positive backdrop for Bitcoin. “The slowdown in economic growth and persistently high unemployment are increasing stagflation pressure. In such an environment, demand for decentralized, limited-supply assets like Bitcoin could increase,” he said.
The European Central Bank has cut interest rates eight times since June 2024 and the Swiss National Bank has cut interest rates to zero, reinforcing the possibility that global liquidity will turn to crypto markets. According to Hernandez, “Bitcoin’s borderless nature makes it flexible to different central bank policies.”
Warning of Weak Volume in Summer
On the other hand, seasonal risks are on the agenda for the crypto market in the short term. QCP Capital said that investors are acting cautiously, stating that historically trading volumes have decreased in the summer months and the put-call premium rate has increased in the Bitcoin options market. In addition, month-end portfolio rebalancing and reduction of leveraged transactions stand out as additional pressure factors.
Summary
- The Fed has kept interest rates steady, eyes on September for the first cut.
- Bitcoin is trading sideways at $105,000.
- Institutional analysts predict that demand for BTC may increase in a stagflation environment.
- European and Swiss rate cuts increase the likelihood of liquidity flowing into crypto.
- The summer period may be marked by seasonal stagnation and cautious trading strategies.
In an environment of increasing macroeconomic uncertainty, Bitcoin continues to attract attention as an alternative safe haven for institutional investors.
*This is not investment advice.