For the crypto and broader financial market, today is a significant moment as the Federal Open Market Committee (FOMC) meets. Analysts are in agreement that this meeting is one of the most critical in recent years. Kurt S. Altrichter, a financial advisor and founder of Ivory Hill, has gone so far as to describe today’s FOMC meeting as the “most important of your life”. In a recent post on X, Altrichter lays out the stakes.
At the heart of today’s FOMC meeting is the Federal Reserve’s potential indication of a September rate cut. According to Altrichter, financial markets are almost universally expecting this move, with Fed fund futures indicating a strong likelihood of such an outcome. “Market expectation is a strong signal for a September rate cut,” Altrichter emphasizes, suggesting that today’s update will be a pivotal moment for financial markets.
The key question is how strongly the Fed will signal a September rate cut. Investors are urged to scrutinize the FOMC’s statement, particularly the third paragraph, which could subtly signal the Fed’s confidence in achieving its inflation targets. Altrichter advises looking for this critical sentence: “The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent.” Any changes in this wording would clearly indicate that the Fed is nearing its inflation control goals, possibly setting the stage for rate adjustments.
Altrichter outlines various potential scenarios stemming from the meeting, each with specific market repercussions. In a dovish scenario where the Fed signals a rate cut for September, Altrichter anticipates a broad market rally, especially in sectors less sensitive to interest rates. “Yields and the dollar should fall modestly with a modest rally in commodities,” Altrichter predicts, suggesting significant movements in both standard and sector-specific indexes.
Conversely, in a hawkish scenario where the Fed maintains its current stance without hinting at future cuts, the markets could see a downturn. “Look out below and expect a sharp decline. SPX should fall by 1-2 percent,” he warns, noting that tech and growth sectors might relatively outperform due to their appeal during higher yield periods.
Potential adjustments in US monetary policy also bear direct consequences for the Bitcoin and crypto markets. Cryptocurrencies, often seen as alternative investments, are sensitive to shifts in monetary policy, particularly interest rates.
Should the dovish scenario occur, it could make Bitcoin and other cryptocurrencies more appealing. A signal of lower future rates could drive increased investment into the crypto market, potentially leading to price hikes as investors seek higher returns in alternative assets.
Conversely, if the Fed signals reluctance to cut rates, indicating either a stronger economic outlook or concerns about inflation, this could strengthen the US dollar and boost yields on traditional financial instruments. Such an environment could lead to a pullback in crypto markets, as the comparative advantage of Bitcoin and cryptocurrencies diminishes against strengthening traditional yields.
Max Schwartzman, CEO of Because Bitcoin Inc, commented via X: “FOMC is today] & its incredibly important as we get into the end of this fed cycle… Here is how the last 11 meetings have gone for Bitcoin…”
Today’s FOMC meeting thus represents a watershed moment for financial markets globally, with significant implications for both traditional and crypto markets. As Altrichter succinctly puts it, “A Sept Fed rate cut has driven the 2024 bull market. Tomorrow’s meeting will either reinforce that tailwind or refute it. If the Fed signals a cut, the rally continues. No signal: markets could get ugly.”
At press time, BTC traded at $66,462. BTC bounces off the 20-day EMA, 1-week chart.
