Major cryptocurrencies are experiencing upward momentum amid significant economic events expected in the coming days. Notably, the Federal Reserve (Fed) and the Bank of Japan (BOJ) are set to announce their respective rate decisions, accompanied by earnings reports from influential tech stocks within the so-called “Mag 7.”
Analysts predict the Federal Reserve will likely reduce its policy rate by 25 basis points, lowering it to 4%. This move would mark a total easing of 150 basis points since last September. The CME Fed funds futures market indicates a strong consensus that this rate cut will occur, with expectations for additional reductions in 2024, which bodes well for cryptocurrencies like Bitcoin.
Bitcoin has already registered a 1.7% rise in the last 24 hours, bringing it to $113,600 and extending its winning streak to three days. This rise comes amid indications of seller fatigue near the 200-day simple moving average (SMA), currently at $108,800. However, Bitcoin still needs to break past the 50-day SMA at $114,250 to sustain its bullish trend. Other cryptocurrencies, including XRP, ether, and Solana, have also seen gains of about 3% recently, with XRP exceeding its 200-day SMA, suggesting renewed bullish sentiment.
The focus will shift to Fed Chair Jerome Powell’s upcoming press conference, which is anticipated to address job market concerns and inflation projections. Powell is likely to reiterate that there are increasing risks to the job market, while suggesting that inflation related to tariffs is expected to be temporary. His comments could enhance market optimism regarding future monetary easing. Questions about the ongoing U.S. government shutdown are expected, but Powell may downplay its impact on economic outlooks, maintaining previously stated forecasts.
Further developments from the Fed may stem from Powell’s indications that the central bank could be near a point of halting its quantitative tightening (QT) measures. Recently, the banking system’s reserves dipped below $3 trillion, which is considered a critical threshold for maintaining ample liquidity. While an end to QT does not automatically suggest a return to quantitative easing (QE), it could spark optimism in cryptocurrency communities.
Meanwhile, the Bank of Japan is poised to release its own policy statement on Thursday, with Governor Ueda in focus. There’s a prevailing expectation that the BOJ will maintain current interest rates, although any new economic forecasts could lead to market fluctuations. Analysts suggest that while no change is anticipated at this meeting, the likelihood of rate changes later—such as a quarter-point cut in December—could create volatility.
In the corporate sector, major tech firms—including Apple, Meta Platforms, Alphabet, and Microsoft—from the “Mag 7” group are set to announce earnings this week. Investors will be closely monitoring these reports for indications of trends in AI investment, which has significantly influenced risk asset performance throughout 2023. A slowdown in AI spending could lead to heightened market unease.
Further complicating the economic landscape, U.S.-China trade tensions showed signs of easing with a potential trade deal on the horizon. Following a recent announcement, President Trump and Chinese leader Xi Jinping are scheduled to meet on Thursday during the Asia-Pacific Economic Cooperation (APEC) Summit in South Korea. Optimism surrounding this meeting may elevate expectations for a trade agreement, although any negative surprises could provoke a risk-averse response among investors.
