Bitcoin (BTC/USD) surged by 5.3% on Tuesday, reaching a high of $61,331 and trading at $60,985. This surge comes as the market braces for the Federal Reserve’s highly anticipated interest rate decision on September 18, a move that could significantly impact cryptocurrency markets. Ethereum (ETH/USD) also joined the upward trend, rising by 4% to $2,375.
The market remains divided on the extent of the rate cut, with some predicting a 25 basis point cut while others anticipate a larger 50 basis point reduction. This uncertainty has traders positioning themselves for the Fed’s decision, which could generate significant market volatility. Illia Otychenko, Lead Analyst at CEX.IO, emphasized this potential in a note to Decrypt, stating that a 50 basis point cut could result in greater market fluctuations compared to a 25 basis point reduction.
He further highlighted the importance of the Fed’s forward guidance, suggesting that its tone could be even more impactful than the size of the rate cut itself. “A 25 bps cut with more aggressive guidance might signal a dovish stance, while a 50 bps cut paired with a passive outlook could cause uncertainty,” Otychenko explained. Ultimately, the market’s reaction may hinge on Jerome Powell’s commentary following the decision. If his remarks fail to clarify the Fed’s short-term strategy, investor uncertainty could lead to increased risk aversion, potentially putting downward pressure on Bitcoin prices.
However, the cryptocurrency market is not solely focused on the Fed’s decision. This week also sees several other global macroeconomic events that could influence the broader market sentiment and impact crypto prices. Japan’s trade data, the Bank of England’s interest rate decision, and U.S. initial jobless claims are all key indicators to watch. Later in the week, Japan’s Consumer Price Index (CPI) and the Bank of Japan’s rate decision will provide further data points for crypto traders to consider.
Inflows activity in Bitcoin and Ethereum exchange-traded funds (ETFs) also reflects mixed market sentiment. Data from SoSo Value shows that Bitcoin spot ETFs recorded a net inflow of $12.9 million on September 16, driven by inflows into BlackRock’s IBIT and Fidelity’s FBTC ETFs. However, Grayscale’s GBTC ETF saw significant outflows of $20.75 million, indicating that institutional investors are still exercising caution. Ethereum ETFs experienced a net outflow of $9.5 million, with major outflows from Grayscale’s ETHE ETF, though BlackRock’s ETHA ETF recorded inflows of $4.15 million.
These developments will be part of the broader conversation at Benzinga’s Future of Digital Assets event on November 19, where industry leaders will analyze how macroeconomic policies are impacting the cryptocurrency market and discuss the implications for the future of digital assets.
