Crypto market wavers as senior Fed official predicts several rate cuts
The crypto market wavered today, February 17, as traders watched several potential catalysts, including Federal Reserve statements and the happenings in the Middle East.
- The crypto market wavered after Austan Goolsbee said that he supported more interest rate cuts.
- He believes that more cuts will be necessary if inflation continues falling.
- The statement came a day before the Fed published the minutes of its last monetary policy meeting.
Crypto market on edge after a dovish statement by Austan Goolsbee
Bitcoin (BTC) price was little changed at $67,000, while Ethereum (ETH) was trading at $1,980. The market capitalization of all coins dropped by 0.15% in the last 24 hours to over $2.34 trillion.
Similarly, the Crypto Fear and Greed Index was hovering at the extreme fear zone of 13, while the Altcoin Season Index was trading at 31.
The crypto market wavered after Austin Goolsbee, the head of the Chicago Fed, noted that there was room for several interest rate cuts this year if inflation continues to fall toward the 2% target. He said:
The statement came a few days after the Bureau of Labor Statistics published encouraging consumer inflation dropped to 2.4% in January from the previous 2.7%, while the core CPI remained unchanged at 2.5%. Inflation has been trending downward from 3%, and the downtrend may continue in the coming months.
The recent dot plot signaled that the Fed will deliver one interest rate cut this year. On the other hand, Polymarket traders anticipate that the bank will cut rates three times.
The crypto market would benefit from more interest rate cuts, as we saw during the Covid pandemic, when Bitcoin and most altcoins jumped to record highs as central banks slashed rates.
Hedge funds are betting against the dollar
Goolsbee’s statement came as a report showed the hedge funds were increasingly bearish on the US dollar. The survey by Bank of America showed that the currency’s positioning among fund managers fell to the lowest level in over a decade. In theory, a weaker dollar benefits the crypto market because most coins are quoted in U.S. dollars.
Looking ahead, the next major catalyst for Bitcoin and other altcoins will come on Wednesday, when the Federal Reserve releases minutes from its last monetary policy meeting. These minutes will provide more information about the last meeting and hints on what to expect in the next meetings.
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