Cryptocurrencies experienced a boost at the start of Monday, buoyed by gains in the equity markets, signaling increased optimism as significant central bank decisions loom.
This week, investors are keenly awaiting the release of crucial economic data and the Federal Reserve’s July meeting, scheduled for Tuesday and Wednesday. The outcome will include an announcement on interest rates and new monetary policy guidance.
While interest rates are widely expected to remain unchanged, investors will be on the lookout for hints regarding the timing and frequency of potential rate cuts this year. The central bank’s policy guidance and the post-meeting press conference with Fed Chairman Jerome Powell will be closely scrutinized.
On Friday, the personal consumption expenditures (PCE) price index, the Fed’s preferred measure of inflation, met expectations. In June, the PCE increased by 0.1% from the previous month and 2.5% year-over-year.
Traders have been anticipating a strong likelihood of the first interest rate cut occurring in September.
Despite Fed officials emphasizing the need for more evidence of inflation steadily returning to 2% before cutting rates, Fed Chair Jerome Powell suggested earlier this month that the central bank might not wait until inflation hits this target before making rate cuts.
Crypto Market Response
Bitcoin surged to its highest level since mid-June, reaching $69,868 in early trading today as expectations for U.S. Federal Reserve interest-rate cuts boosted investor sentiment. At the time of writing, BTC had risen 2.65% in the last 24 hours to $69,520. Other cryptocurrencies also saw gains, with Ethereum, Solana, and Dogecoin posting increases between 2% and 4%. Bitcoin Cash, a Bitcoin derivative, gained as much as 15%.
The upcoming Fed meeting this week is expected to set the stage for the beginning of a rate-cutting cycle, which is viewed favorably by the cryptocurrency market, thus lifting overall market sentiment.
Currently, Bitcoin is approximately $4,400 below its all-time high of about $74,000 in March. Inflows into specific U.S. exchange-traded funds have contributed to Bitcoin’s increased value this year.
