Bitcoin is facing an important decision from the US Federal Reserve

Bitcoin price is under severe pressure after hitting a new all-time high of nearly $73,800 not long ago. In the early hours of March 20, Bitcoin price fell below $61,000, while the digital currency is now back at $63,000.

Today could be crucial for Bitcoin as the US Federal Reserve meets again to make a new interest rate decision.

Crucial day for Bitcoin?

The interest rate decision itself should come as no surprise. There is no reason for the Federal Reserve to lower or raise interest rates. Inflation is rising again, which means the bank will most likely keep interest rates at the same (strict) level.

More interesting are the press conference and the US Federal Reserve’s outlook after the interest rate decision. Tonight we get a glimpse into the Federal Reserve’s expectations for the remainder of 2024.

There is therefore a good chance that we are in for a volatile day.

In December, the US Federal Reserve decided to stop raising interest rates. According to The Kobeissi Letter, this felt like a “declaration of victory” from the Federal Reserve over inflation. Now we are a few months further and the situation is suddenly completely different.

Since then, the number of rate cuts factored in by the market has fallen by three. This makes it very special that Bitcoin and the stock markets have performed so well.

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What does a strict US Federal Reserve mean for Bitcoin price?

In theory, a strict US Federal Reserve bearish for the Bitcoin price. Fewer interest rate cuts means less capital in circulation. The higher the interest rate, the more expensive it is to raise capital. So this is basically a pessimistic situation.

However, there are analysts who have a different perspective.

According to Michael Howell of Crossborder Capital, the current performance of gold and Bitcoin could signal the “return of the money printer.”

what does he mean with that? Basically, the American government might sometimes get into trouble due to high interest rates. The longer interest rates remain at these high levels, the faster the U.S. government’s interest costs will rise. After all, it is struggling with a national debt of around $34.5 trillion.

In theory, if interest rates remain at these levels, this could spiral completely out of control, with all the attendant consequences for the US dollar (read: a flight to scarcity that benefits assets like gold, Bitcoin and stocks).

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