The cryptocurrency and stock markets are cautiously awaiting a significant signal from the Federal Reserve (Fed). The movements of Bitcoin and Ethereum largely depend on the message from the Fed this week.
Investor sentiment shifts from greed to fear, reflecting instability and expectations of monetary policy changes. Key events include the FOMC meeting minutes and Chairman Fed Jerome Powell's speech directly impacting the trends of traditional and digital assets.
MAIN CONTENT
Bitcoin and Ethereum are declining due to caution ahead of the Fed's announcements.
The FOMC minutes and Chairman Powell's speech are two important events this week.
The market scenario could revolve around whether the Fed remains dovish or shifts to a tightening policy.
What are the important economic events in the United States this week?
This week, the FOMC meeting minutes on Wednesday and Chairman Fed Jerome Powell's speech at Jackson Hole on Friday are the focal points of analysis for investors and analysts to guide market trends.
Cryptocurrency expert Alvaro Mysterio emphasizes that these two events will determine short-term developments, from strong price increases to corrections, and warns investors to have realistic expectations.
What does the FOMC meeting minutes on Wednesday signify?
In a positive scenario, if the minutes indicate the possibility of the Fed cutting the base rate by 25 basis points in September or even hinting at a 50 basis point cut, stocks, especially in the technology sector, will benefit with S&P 500 gains from 1 to 2%. The cryptocurrency market could also rise as easing policies often stimulate risk sentiment.
Conversely, if the minutes emphasize that inflation risks remain or there is a lack of consensus on immediate rate cuts, it would be a negative signal, potentially causing the S&P 500 to drop 1–3%, dragging Bitcoin and Ethereum down as well. Alvaro Mysterio predicts that the overall trend will be quite modest, hovering around a 0.5–1% increase, as the expectation of rate cuts in September has already been priced in by the market.
What impact does Chairman Fed Powell's speech at Jackson Hole have?
This event is seen as a key factor determining the next direction of the market. If Powell expresses a dovish view, emphasizing labor market risks and affirming the possibility of rate cuts in September, stocks and cryptocurrencies could surge, with the S&P 500 rising 2–3% and small-cap stocks potentially increasing by up to 10%.
On the contrary, if Powell warns of persistent inflationary pressures, the market may witness a sharp decline, with the S&P 500 losing 3–7% and many large-cap tech stocks dropping over 10%. However, expert Mysterio believes that the realistic scenario is that Powell will maintain a neutral stance, causing slight market fluctuations within a range of ±1–2%. "A sell-off reaction after the news" may also occur if the speech disappoints.
Strategist Alvaro Mysterio states: "The Fed's message this week could be the catalyst for the market to break out of the stalemate or continue to maintain a cautious pace."
Alvaro Mysterio, Cryptocurrency Analyst, June 2024
What is the conclusion of the current market situation?
The market is in a waiting state and reacting to each signal from the Fed. Whether Bitcoin and Ethereum can continue their recovery trend or adjust depends on the policy nuances in Chairman Powell's speech.
Expert Alvaro Mysterio assesses that this week could make a significant difference for both the stock and cryptocurrency markets, as investors are eager for clear guidance from the Fed.
"This week, developments from the Fed will shape global financial trends in the coming weeks."
Alvaro Mysterio, Analyst, 2024
Frequently Asked Questions
How does the Fed's message affect Bitcoin?
The Fed's interest rate policy directly impacts cash flows and risk sentiment, thereby affecting the prices of Bitcoin and cryptocurrencies in general.
What important information does the FOMC minutes contain?
The minutes reveal the Fed's internal views on future monetary policy, helping investors predict interest rate decisions.
How important is Chairman Powell's speech at Jackson Hole?
This is the occasion for Powell to share his economic outlook, a sign of monetary policy that helps the market orient its reactions.
How does investor sentiment change this week?
Sentiment shifts from greed to fear, reflecting caution before important decisions from the Fed.
What is the connection between the cryptocurrency and stock markets?
Both respond to economic and monetary policy information, influenced by the same global financial ecosystem.
Source: https://tintucbitcoin.com/tien-dien-tu-truoc-fomc-va-jackson-hole/
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