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CME FedWatch Data showed markets pricing in a 92.5% chance the Fed will raise rates by a quarter point on Wednesday, the Fed’s first hike since July 2023.
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Twenty of 22 firms tracked by The Wall Street Journal expect a hike this month.
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Tom Lee called any potential hike a “policy error” as supply-shock inflation fades.
Bitcoin (BTC) slipped below the $77,000 mark on Tuesday ahead of the Federal Reserve’s rate decision on Wednesday, with markets pricing in a 92% chance of a quarter-point hike that would end more than a three-year pause in rate increases.
However, crypto analysts like Bitmine Immersion Technologies (BMNR) chairman Tom Lee and MNFund founder Michael van de Poppe believe that a rate hike is unlikely. If the Federal Reserve does hike rates, it would be the first time since July 2023 that the cryptocurrency market has faced an interest rate increase.
Bitcoin’s price fell over 3.3% in the last 24 hours to around $76,200. On Stocktwits, retail sentiment around the apex cryptocurrency remained in the ‘extremely bearish’ zone over the past day.
What Are Analysts Saying?
Van de Poppe said that he does not expect a rate hike and that, no matter what, markets will likely be on the rise. The next 48 hours will be volatile with the Clarity Act vote and the Federal Open Market Committee (FOMC) meeting overlapping, he said.
He also added that he would likely buy any further dip. At a technical level, Van de Poppe sees Bitcoin at range lows after a period of consolidation. He forecast that if Bitcoin reclaims $78,000, it could open a move between $90,000 and $92,000 over the coming weeks.
Meanwhile, Lee argued against the hike on Monday. Lee said he agreed with Moody’s Analytics Chief Economist Mark Zandi, and quoted him saying that the Fed “can wait.”
A hike would be a “policy error,” said Tom Lee. He agreed that the economy is already close to potential growth and full employment, while much of the remaining inflation comes from supply shocks that are fading.
He cited Goldman Sachs estimates, which said those shocks add about 1.75 percentage points to Core PCE right now and should fade by 100 bp into early 2027 even without tighter policy, he noted. “Why hike when Core PCE [is] set to decline 100 bp without a hike?” he asked, noting that markets often rally once they have braced for the news.
Will The Fed Hike Rates?
The comments came as the CME Group’s FedWatch tool showed a 92% chance of a September rate hike, up from 59.4% a week ago and a 33.1% chance a month ago.
Source: finance.yahoo.com