U.Today – Cryptocurrencies strengthened on a wave of stock market gains early Monday, pointing to greater optimism ahead of crucial central bank decisions.
This week, investors are looking ahead to key economic data releases and the Federal Reserve’s July meeting scheduled for this week. The Federal Reserve’s meeting will begin Tuesday and conclude Wednesday with an announcement of interest rates and novel monetary policy guidance.
Rates are widely expected to remain steady, but investors are looking for signs of when and how many rate cuts could come this year. So they will be closely watching any policy guidance from the central bank, as well as a post-meeting press conference with Fed Chair Jerome Powell.
On Friday, the Personal Consumption Expenditures (PCE) price index, the Fed’s preferred measure of inflation, came in in line with expectations. PCE rose 0.1% in June from a month earlier and 2.5% from a year earlier.
Recently, investors have been pricing in a high probability that the first interest rate cut will occur as early as September.
While Federal Reserve officials have repeatedly said they expect more evidence that inflation is steadily returning to 2% before they cut interest rates, Federal Reserve Chairman Jerome Powell indicated earlier this month that the central bank may not wait for inflation to reach that target before cutting rates.
Cryptocurrency Market Reaction
The stock hit its highest level since mid-June this morning, hitting $69,868, as expectations of interest rate cuts by the US Federal Reserve boosted investor sentiment.
At the time of writing, BTC is up 2.65% in the past 24 hours to $69,520. Several cryptocurrencies also traded in the green and posted gains of between 2% and 4%. The Bitcoin spin-off gained a whopping 15%.
The Federal Reserve meeting later this week will likely set the stage for the start of a rate cut cycle, which is seen as favorable for cryptocurrencies; these expectations have boosted market sentiment.
Bitcoin is about $4,400 off its all-time high of about $74,000 in March. Inflows into certain U.S. ETFs have boosted Bitcoin’s value this year
