Welcome to another Crypto Weekly Digest brought to you by VirtualBacon.
This week, we’re diving into the recent FOMC meeting and its ripple effects on the market. With the possibility of another rate hike looming by year’s end, the market is steeped in uncertainty. We’ll explore how this meeting differed from the last and delve into the probabilities surrounding the anticipated rate hike and future rate cuts. We’ll have a look at current perspectives on Bitcoin and the overall crypto market prices. As always, wrapping up, we'll provide a sharp overview of the current market sentiment, highlighting both the standout and underperforming coins of the week and a concise analysis of key cryptocurrencies and the forces shaping their trajectories.
Understanding the FOMC: The Impact of Rate Hikes
In the recent FOMC meeting, expectations of no rate hike were met, maintaining the rate at 5.5%.
However, a more hawkish stance signaled a potential rate hike later this year. Why does this matter?
Rate hikes are pivotal in combating inflation by making borrowing costlier, thus reducing spending and cooling demand. They also make saving more appealing. These hikes impact stock markets and volatile assets like Bitcoin by increasing borrowing costs and reducing buying demand. While crypto is seen as high-risk and are mainly driven by speculation, they are not immune to the effects of rate hikes, often following trends in traditional financial markets.
Key Takeaways and Potential Impacts
Jerome Powell's speech during the FOMC meeting revealed significant insights and raised concerns about a potential government shutdown in November, which could influence the Fed's decisions and inject more uncertainty into the market.
Powell stressed the critical nature of maintaining price stability, suggesting the possibility of one more rate hike this year. He also discussed the potential for a soft landing but did not present it as a likely scenario.
The Fed remains steadfast in its commitment to a 2% inflation goal, implying that until inflation is reined in, rate cuts are off the table. This commitment indicates a prolonged rate hike and pause cycle, contrasting with earlier speculations of a relaxed approach to inflation targets. The emphasis on a strict 2% inflation goal underscores the Fed's resolve to maintain economic stability, potentially affecting market dynamics and investor strategies.
Upcoming FOMC Meetings and Market Expectations
The Federal Reserve has two more meetings scheduled for 2023, on October 31st and December 12th.
These meetings are crucial as they present opportunities for the Fed to adjust rates and share their strategies for tackling inflation in the coming year. The market is divided on what to expect, with some speculating potential rate cuts, but the prevailing sentiment leans towards no significant changes.
These meetings will be closely watched by analysts and investors alike, as the decisions made can significantly impact market dynamics and future investment strategies.
Probabilities of Rate Adjustments in 2023 and 2024
Analysts are closely watching the likelihood of rate hikes in the remaining FOMC meetings of 2023, with a 68% consensus against a hike in November but a near 50/50 split for December. This implies a 45% probability of seeing higher interest rates by year-end, a significant increase from earlier predictions made in July.
Looking ahead to 2024, the market has adjusted its expectations for rate cuts, with the majority now foreseeing reductions towards the end of the year, a shift from previous anticipations of mid to Q3 2024. This change in market sentiment reflects the perceived hawkish stance of the Fed and has implications for investment strategies and market dynamics in the coming months.
As we delve into the market analysis, we will have a look at the performance and future prospects of Bitcoin and Ethereum, followed by a brief overview of the top gaining and losing altcoins of the week. Let’s begin by assessing the market dynamics surrounding Bitcoin.
Bitcoin, leading into the FOMC meeting, peaked at around 27.2k but failed to surpass its previous swing high at 27.8k, indicating a potential short-term downtrend characterized by lower highs and lower lows.
The immediate outlook suggests a possible reversion to the downside of the channel, with Bitcoin likely to revisit levels around 25k or even 24k. However, this is perceived as a minor correction in the broader scheme, with substantial support anticipated between 24k and 21.5k, a range marked by significant buying power due to historical consolidation patterns.
In this range, buying is deemed favorable, with the long-term perspective remaining optimistic despite short-term fluctuations. Keep an eye on market movements and strategic buying opportunities in the coming weeks.
Ethereum seems to be shadowing Bitcoin’s movements, albeit with a seemingly weaker stance. Currently, Ethereum is grappling with significant short-term resistance around the 1660 range, oscillating between 1560 and 1680.
However, it has been struggling to maintain these range lows, indicating a potential decline to around 1540, and possibly even 1360 if Bitcoin revisits the 23k range. While the likelihood and profit margins of such a scenario are not substantial, strategic short-term positions could be considered around the 1550 break point, targeting the 1360 range.
For long-term holders, accumulating between 1350 and 1550 seems to be a sensible approach, focusing on value rather than chasing the absolute bottom.
Altcoins I’m Buying
Make sure to watch this video for my short-term outlook on the market and the top Altcoins I’m buying during this dip.
Best Performing Coins of The Week
Worst Performing Coins of The Week
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The first coin we’ll look at this week is Immutable, a coin that has experienced an impressing 15.40% gain this week.
This substantial increase in Immutable's value is propelled by its recent listing on a major exchange, sparking a flurry of buying activity. Immutable is recognized as the “future of Web3 gaming,” and its listing on South Korea's leading exchange, Upbit, has intensified interest and investment in its token.
Immutable’s innovations in Web3 gaming and the launch of the Immutable zkEVM Testnet have sparked discussions within the crypto community about its future. The strategic listing and ongoing developments have the broader community closely observing Immutable's progress, balancing excitement with careful analysis.
The next coin we will look at is Chainlink, a coin that saw a 12.60% gain over the past week.
Chainlink is in the limelight, exhibiting notable performance and aiming to surpass the $7 mark. This is attributed to its integration with the Ethereum Layer 2 scaling protocol, Arbitrum, enhancing the development of cross-chain decentralized applications and marking the launch of the Chainlink Cross-Chain Interoperability Protocol (CCIP) on Arbitrum One. This integration unlocks a variety of applications and solidifies Chainlink’s role in the blockchain ecosystem, generating excitement and speculation within the community.
Chainlink’s network is buzzing with heightened activity, evidenced by a spike in unique addresses, reaching a two-month peak of 3,964, indicative of increased community engagement and broader cryptocurrency adoption. This, coupled with a decrease in LINK held in exchange wallet addresses and substantial accumulation by whales, underscores a strong bullish momentum and a potential upward trajectory in its market value.
The final coin we will look at is Gala, a coin that has experienced a 8.67% drop this week.
This decline is attributed to the ongoing legal disputes between the Co-Founders of Gala Games, causing unrest among investors. The Co-Founder and CEO, Eric Schiermeyer, has initiated a lawsuit against another Co-Founder, Wright Thurston, and True North United Investments, LLC. This internal conflict has seen the price of Gala Games fluctuating over the past week.
While investors and traders are cautious and exploring other projects as they await the outcome of this dispute, some analysts remain optimistic about Gala Games' future. The community is closely watching for any positive developments that could signal a turnaround for Gala Games amidst the legal turmoil.
This week, we delved into the recent FOMC meeting, exploring its implications, key takeaways, and the anticipated economic landscape for the year’s end and beyond. We dissected the market, analyzing Bitcoin and Ethereum’s recent trajectories and forecasting their paths in the coming weeks and months. Additionally, we spotlighted the Altcoin market, examining the top gainers and losers and unraveling the reasons behind their performances. Keep tuned for more updates and analysis!
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