With the US Federal Reserve’s Federal Open Market Committee (FOMC) set to release a statement from their meeting this evening (UTC time), crypto holders may be in for another run higher if the traditional market gets it the way it wants.
While the Fed is not expected to announce any major changes to its monetary policy today, the meeting is still seen as important for the traditional financial markets, with players there largely expecting a further easing of monetary policy to help markets – and in turn the larger economy – through the COVID-19-triggered downturn.
And with the traditional financial markets more or less demanding monetary policy support – which also may include ‘money printing’ – holders may also have something to look forward to as excess liquidity finds its way to scarce assets such as bitcoin and gold.
It is important for the Fed to sound “very dovish” during the announcement today, Priya Misra, global head of rates strategy at TD Securities told the Financial Times, adding “the Fed knows that the market is going into this meeting with expectations. They need to feed it with something.”
“Dovish” might mean an easy monetary policy from the central bank, something which in theory should benefit hard assets. Conversely, a hawkish central bank focuses on limiting the supply of currency, which would typically strengthen fiat currencies and weaken hard assets like gold, silver, and bitcoin.
A similar expectation was also voiced by Ethan Harris, head of global economic research at Bank of America, who told Marketwatch that certain new tools may also be on the table for the Fed, and that the most likely action would be to publicly pledge to keep interest rates at zero until inflation reaches or moves above its 2% target.
“I think there is a good chance that it comes at some point, either in the fall if the economy doesn’t pick up, or some point down the road,” Harris was quoted as saying. “Yield-curve control is much easier than trying to fiddle around with quantitive easing], and is the one macro tool that would show a significant step forward,” he added.
Further, it is also expected that Fed Chairman Powell could use the occasion today to put pressure on members of the US Congress to get them to pass a new round of stimulus checks to US residents.
According to the Financial Times, Democrats in the US House of Representatives have already passed a bill that would secure jobless benefits of USD 600 per week to Americans, while Republicans in the Senate are considering a USD 200 per week plan. An agreement between the two sides would lead to checks being sent out, with some of the money possibly finding its way into bitcoin and other cryptoassets.
A statement from the FOMC meeting will be delivered today at 18:00 UTC time, with a press conference following at 18:30 by Fed Chairman Jerome Powell.
At pixel time (13:03 UTC), BTC trades at USD 11,115 and is up by 1% in a day and 19% in a week.
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Learn more:
Another Bitcoin Stimulus Check Might Be Around The Corner
Goldman Sachs Strategist Warns of 'Real Concerns' Over US Dollar
