What to Expect from the November 1st Fed Meeting?

Federal Reserve interest rate decisions have become critical for investors due to the tightening that started in 2022. It’s been almost 2 years. We eagerly awaited every Fed meeting, discussed expectations and analyzed comments. We searched for hidden meanings in every sentence spoken by Powell, even in every word. So what are the expectations for the November 1st meeting?

November 1st Fed Meeting Interest Rate Decision

Next Wednesday, the Fed will announce its interest rate decision, and according to FedWatch data, we will see that it is likely to be kept unchanged with a 99% probability. The FedWatch data usually predicts the outcome days before the meeting. Although the global economy is unpredictable, the Fed does not have a habit of surprising when it comes to interest rate decisions.

It’s been almost 2 years, and Fed meetings have turned into nightmares for cryptocurrency investors, starting days in advance. Powell did something out of the ordinary with the fastest interest rate hikes in history. Of course, in return, we saw the dollar index rise while risk assets hit new lows. The main reason for the decline in the price of BTC was the difficulty of accessing money and the insistence on the 2% inflation target.

Interest Rate Ceiling and Cryptocurrencies

Traders and investors generally agree that there will be a pause in interest rate hikes at the upcoming FOMC meeting. However, we may see statements that increase the possibility of interest rate hikes at the December 13th, 2023 meeting. If there is no increase in this meeting as well, it is expected that the Fed will start cuts in the middle of next year and the conviction that the interest rate ceiling has been reached will strengthen.

The Fed’s goal is to fully feel the impact of front-loaded interest rate decisions and, if necessary, start cuts not in the middle but at the end of next year. At least, this is what we can understand from the recent statements.

If Powell implies that interest rates can be raised at the December meeting, depending on the persuasiveness of his tone, we may see cryptocurrencies fall. The second possibility is that Powell focuses on how long the rates will be kept at the peak instead of raising them. This is deterrent for the market, and if there are statements suggesting that the expected 2 cuts in the coming year are reduced to 1, it would be bad for cryptocurrencies.

Although ETFs and institutional demand push the price up, the continuation of a tight monetary policy for another 8-9 months significantly boosts the confidence of Bitcoin bears. On the other hand, while the institution continues to shrink its balance sheet without raising interest rates (+tightening credit), it continues to tighten the economy.

Source