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Following
BTC Federal Reserve Decision and Crypto Market: Outlook for Key Events for the Week
Although there will be a number of major economic events in the next five trading days, the reality is that only a few (and with a high probability) of these events will have a substantial impact on the cryptocurrency market. However, no matter which direction the impact fluctuates, it can be extremely severe.
Kobeissi Letter highlighted that Wednesday will face the auction of 20-year treasury bonds, the release of August retail sales data, and the most critical-the Federal Reserve's September interest rate decision. The latest data shows that given recent conflicting economic data, the market expects the probability of the Fed raising interest rates by 25 basis points to be between 85% and 90%.
Focus on the Federal Reserve's policy shift
In just a few weeks, the Federal Reserve's policy environment has undergone tremendous changes. August employment data released in early September showed that the United States created 162,000 new jobs last month, far exceeding market expectations by three times. The subsequently released producer price index (PPI) showed that annual producer inflation accelerated to 5.4%. Last Friday's Consumer Price Index (CPI) report further confirmed that the overall inflation rate was 3.4%, with the monthly core CPI slightly above expectations.
This series of data, coupled with the fact that oil prices continue to remain above $100 and diesel prices hit new highs in the United States, strengthens the case for the Fed to adopt a more tightening policy.
Bitcoin and altcoins have fully demonstrated their sensitivity to such policy changes. During the Jackson Hole meeting a few weeks ago, after Federal Reserve Chairman Kevin Warsh delivered a speech, the currency price fell sharply; as the latest economic data pushed up the probability of a rate hike, the currency price fell again under pressure.
The only question at the moment is whether the much-awaited interest rate increase has been absorbed by the market in advance? Falling from $82,400 to below $78,000 today, investors will be closely watching Washi's press conference after the meeting for clues as to whether the Fed's decision on Tuesday is a one-time adjustment or the beginning of a new tightening cycle.
Tuesday test: CLARITY bill vote
Before all eyes turn to Wednesday's Fed, the crypto industry had another major event on Tuesday. The Senate is scheduled to hold a closing debate vote on the CLARITY Act at 2:15 p.m. that day, which requires the support of 60 senators to advance debate on the key bill.
The CLARITY Act aims to establish a comprehensive U.S. crypto market structure and further clarify the respective areas of responsibility of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).
Republicans last week released an update that added new rules to the Decentralized Finance (DeFi) protocol and clarified how credit unions conduct their crypto business. In addition, they released the "final, best and final" draft of the legislation on Sunday, which includes a proposed ethics code that the president supports.
