The FED, the FOMC, and the Drama of Inflation
Tomorrow is not just any day for your crypto portfolio. The Federal Open Market Committee (#FOMCMeeting $) of the Federal Reserve (FED) of the United States meets, and what they decide about interest rates could shake the markets.
Imagine the FED as the DJ of the economy. If inflation (that bug that makes everything more expensive) is out of control, the DJ turns up the volume (the rates). This makes borrowing more expensive, slows down spending, and, in theory, lowers prices. But beware, an aggressive increase can cool down the economy, and that directly impacts risk assets like your cryptocurrencies!
If the FED raises rates, people tend to pull money out of volatile assets (like Bitcoin or Ethereum) to invest in "safer" things that now yield better, like government bonds. If they decide to keep rates or even lower them (unlikely with current inflation), the markets could breathe a sigh of relief.
All eyes will be on the speech of Jerome Powell, chairman of the FED. Every word is analyzed to the millimeter. Will it be a "hawkish" message (tough on inflation) or "dovish" (more lenient on the economy)?
What does this mean for you? Prepare for volatility. The crypto market is hypersensitive to this news. We could see sharp movements up or down. It's a good time to review your strategy and not get carried away by fear or euphoria.
Tomorrow we will know if the DJ of the FED plays a calm ballad or an explosion of techno on the market dance floor! Stay tuned!