The Fed has little ammo left as $30K Bitcoin price becomes key battle line
The Bitcoin price successfully defended the $28,000 support on May 2, but it has yet to prove the strength needed to reclaim the $29,200 level from April 30.
Some analysts will pin the recent downtrend on the expectation of an interest rate increase by the United States Federal Reserve on May 3, but in reality, the market is pricing 92% odds of a modest 25-basis-point increase to its highest level since September 2007.
$DXY up/#Bitcoin down on yesterdays PMI data release. Market is now pricing in a very high probability of 25bps raise at tomorrows #FOMC.This is likely mostly priced in for BTC, but the comments afterwards (more rates/pause) will likely bring the volatility. https://t.co/H5qtGpd8gA pic.twitter.com/BmdsNRtb1f
As the market intelligence platform Decentrader pointed out, the comments from Fed chairman Jerome Powell are more likely to bring surprise elements, either pointing to further measures to slow down the economy or signaling higher odds of the terminal interest rate being close to 5%. Powell is set to hold a press conference at 2:30 pm Eastern Time.
From an employment perspective, the central bank has reason to believe that the market continues to be overheated. The U.S. government reported 1.6 job openings for every unemployed worker in March. Moreover, according to the “ADP National Employment Report” released on May 3, private payrolls increased by 296,000 jobs in April, well above the 148,000 market consensus.
However, raising interest rates has negative consequences for families and small businesses in particular. Financing and mortgages become more costly, while investing in fixed income becomes more attractive. Such an undesired effect of curbing inflation could further shake the core of the
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