Bitcoin Could Rally Post-FOMC Meeting as Fed Faces Rate Cut Calls

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Bitcoin’s price has consistently exhibited notable volatility around Federal Open Market Committee (FOMC) meetings.

Historical data from recent meetings indicates that Bitcoin tends to experience a drop in value before the FOMC’s interest rate decisions, followed by significant gains post-announcement.

Bitcoin Dips Before FOMC, Rallies Post Fed Decision

The Federal Open Market Committee is a branch of the Federal Reserve System responsible for overseeing the nation’s open market operations. The FOMC meetings are crucial events where key decisions on the interest rate at which banks lend to each other and monetary policy are made.

These meetings typically occur eight times a year and involve a thorough discussion of the US economy and the various factors influencing its performance.

On December 13, 2023, the FOMC decided to hold rates steady between 5.25% and 5.50%. Leading up to this meeting, Bitcoin’s price fell by 8.76%. However, after the announcement, Bitcoin surged by 22.07%. This pattern repeated on January 31, 2024, when the FOMC again held rates steady, causing a 4.55% drop in Bitcoin’s value before the meeting and a 26.34% increase afterward.

The trend continued on March 20, 2024, with Bitcoin dropping 11.82% before the FOMC meeting and rising 18.09% post-decision. Similarly, on May 1, 2024, Bitcoin saw a 12.69% decline before the rates were held steady and a 15.95% rise after the announcement.

Looking ahead to the upcoming FOMC meeting on June 12, 2024, Bitcoin has already dropped 8.25%. US Senators Elizabeth Warren, Jacky Rosen, and John Hickenlooper have urged the Federal Reserve to cut rates, citing the adverse effects of current monetary policy on inflation and the economy.

“The Fed’s monetary policy is not helping to reduce inflation. Indeed, it is driving up housing and auto insurance costs—two of the key drivers of inflation—threatening the health of the economy and risking a recession that could push thousands of American workers out of their jobs,” the senators stated in their letter to Fed Chair Jerome Powell.

Given the historical data, market watchers anticipate a potential rebound in Bitcoin’s price post-announcement. The consistent pattern suggests that regardless of the Fed’s decision, Bitcoin often recovers and even thrives after the initial uncertainty surrounding the FOMC meetings dissipates.

Understanding these trends can help investors make informed decisions, balancing the risks and opportunities presented by Bitcoin’s inherent volatility around major economic announcements.

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