Bitcoin’s Rollercoaster: Will the Fed Save the Day or Just Bring Popcorn? 🍿

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<a href="https://jpyxx.com/btc-usd/">Bitcoin</a>‘s Rollercoaster: Will the Fed Save the Day or Just Bring Popcorn? 🍿

What to know:

  • In the grand theater of finance, the Federal Reserve (Fed) is poised to maintain its interest rate range of 4.25% to 4.50%. The spotlight, however, is on the fate of the quantitative tightening program.
  • The curtain may fall on QT, heralding a new era for risk assets, including our dear Bitcoin.
  • Yet, beware! Gains may be stifled by the ominous specter of stagflation lurking in the shadows of economic projections.

As Bitcoin (BTC) attempts to rise from the ashes of its recent misfortunes, the faithful observers turn their gaze to the Federal Reserve’s decision on this fine Wednesday. Some whisper that an announcement to end the balance sheet runoff, known as quantitative tightening, could be the silver lining the market desperately seeks.

The Fed’s proclamation is set for 18:00 UTC, followed by the illustrious Chairman Jerome Powell’s press conference, half an hour later. Will he bring tidings of joy or merely more questions? 🤔

It is unlikely that the bank will spring any surprises regarding interest rates, as they are expected to remain firmly in the 4.25% to 4.50% range. Thus, the audience’s attention will be riveted on how the policymakers intend to navigate the treacherous waters of quantitative tightening, especially with the Treasury entangled in the ongoing debt ceiling drama. And let us not forget the eagerly awaited summary of economic projections!

Since June 2022, the Fed has been on a slow march, shrinking its balance sheet, which had ballooned to a staggering $9 trillion post-COVID, when the bank engaged in a buying spree of assets, including bonds, to prop up the markets. Ah, the irony of trying to fix a problem by throwing money at it! 💸

The minutes from the January Fed meeting revealed that policymakers pondered the idea of pausing or slowing the reversal of the balance sheet expansion that had greased the wheels of the crypto bull market of 2020-21. Could Powell drop a hint today? One can only hope!

“Late last year, Fed Chair Powell hinted that the end of QT was coming in 2025. If he mentions it in tomorrow’s statement or press conference (I imagine someone will ask him), it would signal that we’re entering a new monetary regime, ready to resume debt purchases should QE become necessary again,” mused Noelle Acheson, the sage behind the Crypto Is Macro Now newsletter.

“While renewed QE is unlikely any time soon, the return of a large buyer (the Fed) to the market could be a delightful surprise,” Acheson added, noting that the end of QT would be a timely move to prevent liquidity hiccups in the Treasury market, which faces a daunting $9 trillion in debt maturity this year. Talk about a financial cliffhanger! 😅

New York Life Investments’ Economist Lauren Goodwin echoed this sentiment, suggesting that an earlier end to the balance sheet runoff could provide the market with the dovish signal it has been yearning for.

Traders on the decentralized betting platform Polymarket are betting on a 100% chance that the Fed will end the QT program before May. The stakes are high, and the resolution will be “Yes” if the central bank increases its securities holdings week-over-week by the end of April. Place your bets, folks! 🎲

Bank of America predicts end of QT

Several investment banks, including the ever-watchful Bank of America, anticipate that the Fed will conclude QT amidst an uncertain economic outlook, primarily due to President Donald Trump’s trade tariffs. Ah, the joys of politics and economics intertwined!

“Our rates strategists expect the statement to indicate that the Fed is pausing QT until the debt ceiling is resolved, as suggested

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2025-03-19 10:54