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The FED interest rate decision, which is followed with great curiosity in the Bitcoin (BTC) and cryptocurrency markets, will be announced this week.
The Fed will announce this month's interest rate decision on Wednesday, July 30. The market is generally pricing in a 97.4% probability that the Fed will leave interest rates unchanged in July, while the probability of a 25 basis point hike is priced in at just 2.6%.
While no surprise decision is expected from the Fed this week, crypto analyst Paul Barron noted that there is a small possibility of a surprise interest rate cut.
Despite the general market expectation, the analyst predicted that the Fed could make a surprise interest rate cut in July, which could lead to massive gains in stocks, real estate and cryptocurrencies.
At this point, Paul Barron outlined what could happen if the Fed unexpectedly cuts interest rates at this week's FOMC meeting.
The analyst said that a surprise move could lead to massive gains in many sectors, especially BTC and altcoins.
Historically, the S&P 500 has performed well after such cuts, according to the analyst. However, a surprise interest rate cut could have a significant impact on Bitcoin and cryptocurrencies; lower interest rates generally benefit riskier assets.
Although some altcoins like XRP and Cardano (ADA) are facing profit-taking, they could regain upward momentum with the interest rate cut.
While the rate cut sounds optimistic for markets, the analyst also outlined potential downsides. One of the biggest risks is rising inflation. He also noted that if the Fed cuts interest rates this month, it could signal economic weakness, fuel consumer insecurity, and wouldn't be good news for consumers.
According to FED Watch, the Fed is expected to make its first interest rate cut of 2025 in September, and this is priced in at 61%.
*This is not investment advice.