Bitcoin traders are looking forward to Wednesday’s Federal reserve meeting, where the US Central Bank is due to explain how it will implement its flexible inflation policy.
Fed, inflation and Bitcoin: likely results
Federal reserve Chairman Jerome Powell remains unclear on exactly how the Central Bank will push the rate of inflation to the 2% or higher target, following his statement at the annual economic policy Symposium two weeks ago.
As previously reported, the shortage of Bitcoin has turned the crypto asset into a safe haven asset, and it currently has the strongest correlation with gold. Analysts such as the Winklevoss twins, Paul Tudor Jones, and even George ball now view BTC as a reliable insurance against humiliating monetary policy, and believe that higher inflation will push the price of Bitcoin up.
This week, bitcoin investors will turn their attention to the September meeting of the Federal open market Committee (FOMC), as well as two key reports on the state of consumers in the United States.
The upcoming FOMC meetings on Tuesday and Wednesday come just two weeks after the Federal reserve’s annual economic policy Symposium, during which Chairman Jerome Powell announced a new structure to inform the public about the fed’s upcoming rate setting in light of current monetary inflation. The updated framework will allow the inflation target of 2% to be moderately exceeded, which will reduce the need for officials to intervene and raise rates to prevent inflation from rising.
Further clarification from the fed on how it plans to meet its inflation targets over the next two years could push the Bitcoin price up to retest the $ 10,400 resistance.
Lewis Alexander, a leading economist at Nomura, believes that Federal reserve officials have not reached a consensus on the timing of the release of forecasts.
“Recent comments from FOMC participants suggest that consensus on stronger forward-looking forecasts based on results or significant changes in asset purchases has not yet been reached.”
If the Federal reserve doesn’t elaborate on Wednesday, it will likely send the cue Ball below the $ 10,000 support. As reported by the Blockchain.News, a breach of this critical 10K support as a result of the recent failure to continue stimulus, will result in a shortage of retail investors to deal with seller pressure, which is likely to drive the price of PTS down to $ 8,000.
The General stock market expects a correction
The Nasdaq and Dow Jones indexes continued their strong recovery after the March Black Thursday stock Market crash. As we reported earlier, the strength of markets was due to money to stimulate the economy and artificially low inflation. Which looks like it’s going to end soon.
Although there was no immediate correction to the Federal reserve’s announcement of flexible inflation, which should be above the usual 2% in the coming months, when higher interest rates arrive, retail investors will feel a crisis, which will cause a potential sell-off of cryptocurrencies and Bitcoins for immediate liquidity.