Analysts expect the Fed to move forward and begin its first rate cuts by March 2024. In this scenario, the Bitcoin and crypto market is expected to rise.
Bitcoin (B T c) has held its position with the price hovering around $35,000 over the past 24 hours, with some attributing this stability to the possibility of the Federal Reserve pausing its interest rate hikes. This was due to the latest US jobs data, which indicated a less strong performance of the job market.
The US Labor Department’s employment report showed that only 150,000 new jobs were added in October. This followed a significant increase of about 297,000 in September.
Monday’s Bitfinex Alpha report suggested that the low jobs data had further reinforced growing expectations that the Federal Reserve may hold off on raising its rates. The report noted that the central bank’s decision to potentially hold off on rate hikes was due to the tightening of financial conditions, particularly rising bond yields in recent months.
Traders are now considering a 95% chance that the Fed will keep interest rates on hold in December, compared with an 80% chance before the payroll data was released, according to the CME FedWatch tool.
Bitfinex analysts also noted that Friday’s jobs data indicated a possible easing of wage-driven inflation pressures. The report said the slower job growth and higher productivity reported last week were consistent with the Fed’s choice to temporarily pause interest rate hikes.
This development follows the Federal Open Market Committee’s decision last Wednesday to keep the benchmark federal funds rate within its current range of 5.25%-5.50.
Fed takes cautious stance, will make changes soon?
Bitfinex analysts said in their report wrote,
“The policy statement released on Wednesday shows that officials are taking a cautious approach, given that monetary policy affects economic activity and inflation and economic and financial growth.”
Many analysts are supporting the possibility of a first rate cut as early as March 2024. Should this scenario materialize, it could pave the way for a substantial increase in risk assets, including stocks and cryptocurrencies. Interestingly, the next Bitcoin halving event will align with this timeframe around April 2024, potentially providing additional momentum to the Bitcoin price rally.
Fed-funds futures are currently suggesting a 66.5% chance that the Federal Reserve will keep interest rates unchanged at its March meeting. Charlie Ripley, Senior Investment Strategist at Allianz Investment Management Said,
“Overall, the employment report may prove to signal a turning point in the US economy, but more importantly, the data is a signal for the Fed because it shows that monetary policy is working and there is less debate over it.” Whether the policy is restrictive enough.”
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Bhushan is a fintech enthusiast and has a good grasp of understanding the financial markets. His interest in economics and finance drew his attention to the newly emerging blockchain technology and cryptocurrency markets. He is in a constant process of learning and keeps himself motivated by sharing his acquired knowledge. In his spare time he reads adventure fantasy novels and occasionally explores his culinary skills.
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