Crypto Prices Will ‘Nuke’ If 100 bps Rate Announced at FOMC Meeting
Two crypto experts shared their crypto price predictions heading into the FOMC meeting on Wednesday at 2pm ET and Jerome Powell’s speech.
FOMC Crypto Price Predictions
With crypto prices falling in the past 24 hours – Bitcoin and Ethereum are down 3 to 4% – many traders are derisking, waiting on the sidelines and searching for crypto expert analysis online:
Crypto Chase (@Crypto_Chase, formerly @Chase_NL) has approximately 100,000 followers across Twitter and YouTube and correctly sold BTC at over $56k and ETH above $4k.
His FOMC prediction is for crypto prices to crash in a ‘giga nuke’ if a 100 bps rate hike is the outcome – which the market predicts has a 16% probability of happening.
If a 75 basis points hike is announced, he expects liquidity to be run in both directions – choppy price action and the usual ‘Darth Maul candle’ to stop out longs and shorts – before the long term crypto price move is decided by Fed chair Powell’s comments.
FOMC Thread:— Trading Tank (@TheTradingTank) September 20, 2022
Let's start off with what we know. Last week's core CPI and PPI came in hot at 0.6 vs 0.3 and 0.4 vs 0.3 consensus. In other words, not only is core inflation not slowing down 'fast enough’, but it actually went the opposite direction markets were anticipating.
Trading Tank (@TheTradingTank) posted a longer crypto prices forecast for his 7,700 followers across an eight-tweet thread.
His analysis was that since core CPI and PPI data ‘came in hot’ and inflation was higher than expected, the stock and crypto markets may have sold off as a reaction to price in a 75 bps rate hike.
Similar to Chase Crypto, he expects a further sell off if a 100 bps hike is announced, potentially to test the lows (for the Bitcoin price, the $17,600 level hit in June) or crash further.
‘100bps would most likely create a sell-off and we could expect risk assets to test recent lows or maybe even break through. The actual economic effect of rate hikes does not fully materialize until 6+ months down the road, but investors behave as if they are immediate.’
However, he also notes a 75 bps hike could improve sentiment and lead to a mid term crypto price rally – feeling like a ‘victory lap’ if it is in fact already priced in.
Following the FOMC meeting, next week will see the release of US GDP data and PCE inflation data which Trading Tank argues is ‘just as important’.
Earlier this week CryptoNews reported on a third crypto analyst’s price prediction, Ted Talks Macro. He also predicted that the markets have priced in a 100 bps rate and risk assets like Bitcoin will rally if 75 bps is announced.
FOMC Meeting Schedule
The next FOMC meeting following Wednesday is scheduled for November 1st – 2nd.
Find the full FOMC meeting calendar at federalreserve.org.
Update – read our follow up post after the FOMC meeting, including Crypto Chase’s next prediction for the Bitcoin price.