TL;DR
Bitcoin market watchers are focused on the long-awaited SEC approval for a Bitcoin spot ETF exchange. Cryptocurrency traders and institutional finance expect the price to rally higher when that happens.
Meanwhile, the Fed recently held interest rates steady for the time being at its November meeting. The central bank’s next move could have a wide-ranging impact on Bitcoin prices in cryptocurrency markets.
What Bitcoin price does next after a tremendous October rally could hinge on what the Fed does at its next meeting on Dec 12. As a recent update on FXStreet Crypto explains:
“Typically, a rate cut makes it cheaper to borrow funds and engage in leveraging risk assets like Bitcoin for gains. An increase in demand and inflow of funds to the asset likely drive prices higher.”
But whether the Fed hikes, lowers, or holds rates steady all hinges on the economy. GDP grew at a furious 4.9% pace in quarter three, driven mostly by seemingly unstoppable consumer spending. But it’s anybody’s guess what the economy will do next.
If the economy continues such phenomenal growth, then the Federal Reserve is apt to raise rates again to cool the economy back down and keep inflation from spiraling out of control. That could raise headwinds that slow Bitcoin price growth.
But if a year of rate hikes does their trick and GDP growth finally slows, the Fed will begin to seriously consider ending 2022’s high-interest rate regime with a round of cuts.
Lower interest rates and an increase in the money supply are what drove Bitcoin price’s most phenomenal rally in history during the 2020 pandemic. When the Fed begins cutting rates again, it will raise a massive tailwind of support for rising Bitcoin prices.