The FOMC minutes released on the evening of December 4 confirmed the US’s commitment to reducing inflation. Also included in the minutes was the cryptocurrency exchange FTX, which went bankrupt in November. Bitcoin and altcoins are moving sideways after the statements from the committee.
Highlights from the FOMC minutes
Key points from the Fed’s December FOMC meeting minutes, released on Jan. 4, map out the 2023 outlook for the crypto market. The featured titles are as follows:
- Reducing the rate hike to 50 basis points after four consecutive increases by 75 basis points does not indicate a slowdown in inflation.
- The FOMC announced that it will “continue to take decisions at meetings” to return inflation to its 2% target in 2023.
- While the restrictive monetary policy stance is expected to increase the unemployment rate to 4.6% at the end of the year, the struggle to reduce prices is expected to continue.
- For continued restrictive rate hikes, the Fed recommends considering the possibility of a recession in 2023.
- The Fed warned financial markets not to underestimate the central bank’s efforts to reduce inflation to restore price stability.
- CME FedWatch Tool forecasts a 25 basis point rate hike in February and a 50 basis point increase in March. Following the announcement of the FOMC minutes, the probability of a 50 basis point rate hike increased.
- cryptocoin.comWe have included more details in this article.
Fed meeting speeches, statements by Jerome Powell
In the statements made, Fed officials confirmed that we will see higher interest rates ‘for a while’ in the future. In the meeting summary, “Participants generally observed that a restrictive policy stance should be maintained until the incoming data provides confidence that inflation is on a sustained downward path to 2 percent, which will likely take some time. Given the persistent and unacceptably high level of inflation, several respondents commented that historical experience warns against premature easing of monetary policy.”
Officials also said they will focus on data as they move forward and see the “need to maintain flexibility and discretion” regarding policy. However, officials warned that the public should not read too much about the move by the Federal Open Market Committee, which sets interest rates, to slow the rate of increase. After the meeting, Fed Chairman Jerome Powell said some progress had been made in the fight against inflation, but only saw signs of stopping and he expects interest rates to remain high even after the hikes end.
The minutes reflected these sentiments, noting that despite market pricing, no FOMC member expected a rate cut in 2023. Markets are currently pricing in the probability of a 0.5-0.75 percentage point rate hike overall, then taking a break to assess the impact of the hikes on the economy.
Experts’ expectations from Bitcoin and Ethereum for 2023
While the US central bank is signaling that it will continue to raise interest rates this year, Wall Street banks expect a Fed return in 2023. Experts predict that the monetary and economic policy cycles will change by mid-2023. For example, crypto analyst Michael van de Poppe predicted that Bitcoin will reach $17,000 before the next FOMC rate decision on February 1. However, he does not rule out that the BTC price may experience a correction after the meeting. According to Poppe, ideal long positions would be around $16.5-16,600.
Meanwhile, Ethereum price may also exhibit similar moves to Bitcoin before the FOMC meeting. The leading altcoin has been on the green side in recent days, accompanied by increased whale activity. According to Santiment, more than 600 transactions have been made on Ethereum in recent days, valued at more than $100,000. Michael van de Poppe identifies $1,170 as the critical support level for ETH.
