If the futures market is to be believed, the US Federal Reserve’s first interest rate cut could come as early as March 2024. At the time of writing, traders in the futures market give a 44.5 percent chance of a rate cut on March 20, 2024.
What does this mean for the Bitcoin price? Is this bullish or should we be worried?
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Interest rate cut approaching, bullish for Bitcoin
We have been speculating for months about the US Federal Reserve’s first interest rate cut. Starting in March 2022, they began aggressively raising interest rates to curb inflation. Now it looks like inflation is starting to fall and we are seeing the market react extremely to this data.
Everyone is in a positive mood and, according to the futures market, there is now an almost 45 percent chance of the first interest rate cut in March 2024. There is now a 4 percent chance of the first interest rate cut before January 2024.
Previously, the probability of a rate cut in January was 0.0 percent.
Could it be that we get the first interest rate cut from the US Federal Reserve as early as January 31st? We will see. Personally, I don’t expect it will necessarily be very positive for the Bitcoin price when we get the first rate cuts in January or March.
🇺🇸US ECONOMIC DATA THIS WEEK:
*NEW HOME SALES (MON.)
*HOUSE PRICE INDEX (TUES.)
*CONSUMER TRUST (TU.)
*Q2 GDP (Wed.)
*CORE PCE INFLATION (THUR.)
*UNEMPLOYMENT CLAIM (THURS.)
*PENDING HOME SALES (THURS.)
*ISM MANUFACTURING PMI (FR.) 👈$DIA $SPY… pic.twitter.com/FDRuoOPkCa— Investing.com (@Investingcom) November 26, 2023
Core consumer spending (Core PCE, the Federal Reserve’s favorite measure of inflation) is expected to come in at 3.5 percent today for October. We are still a long way from the 2.0 percent target…
So why are interest rates falling?
The chairman of the US Federal Reserve, Jerome Powell, has also indicated several times that his central bank could raise interest rates even further. In this respect, it is special that the market is expecting the first interest rate cut as early as March 2024.
The only explanation I can think of at the moment is a recession (or the US government’s debt clamoring for interest rate cuts).
The battle against inflation does not seem to have been won yet and that does not necessarily mean that this development is positive for the Bitcoin price. If this recession does happen, it could still lead to declines in a possible bull market.
This is why we need to be extra careful, especially now when the market is so optimistic about declaring the start of a new bull market.
Keep an eye on today’s core PCE inflation announcement. A rate cut in January or March 2024 wouldn’t really be bullish…
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