Almost 80% of traders now believe that the U.S. central bank will take a break from increasing interest rates during its upcoming June meeting. In simpler terms, the majority of traders expect the bank to stop raising interest rates for now.
Bitcoin (BTC) remained below the $27,000 mark as the Chair of the U.S. Federal Reserve, Jerome Powell, mentioned that challenges in the banking sector could give the central bank a chance to reduce the frequency of interest rate increases. This is part of their efforts to manage high inflation. In simpler terms, the value of Bitcoin stayed below $27,000 while Powell suggested that the central bank might slow down on raising interest rates due to issues in the banking sector and their concerns about rising inflation.
The biggest digital currency, with the highest market value, was trading at approximately $26,800 recently. This represents a slight increase of about 0.3% over the past 24 hours, as per data from CoinDesk. Bitcoin’s price briefly reached nearly $27,200 on Friday morning when Jerome Powell, the current Chair of the U.S. Federal Reserve, made comments during the Thomas Laubach Research Conference. He suggested that due to challenges in the credit system, interest rates may not need to be raised as much as previously anticipated. In simpler terms, the price of Bitcoin went up a bit to almost $27,200 after Powell spoke about the possibility of not increasing interest rates as much as they initially thought, given the issues in the credit sector.
Bitcoin price chart showed that the cryptocurrency’s price was below $27,000 on Friday afternoon. (CoinDesk)
Powell mentioned that the tools for ensuring financial stability have been effective in calming the banking sector. However, he also noted that recent developments in the sector have led to stricter lending conditions, which can impact economic growth, job opportunities, and inflation. Consequently, he stated that the central bank may not need to increase interest rates as much as initially anticipated in order to achieve their objectives. In simpler terms, Powell explained that measures to stabilize the banking system have been helpful, but changes in the sector could make lending stricter, affecting the economy. As a result, the central bank might not have to raise interest rates as much as they thought to reach their goals.
Powell mentioned that the evaluation of the upcoming interest rate decision will be an ongoing process. This aligns with what he emphasized in the press conference that followed the Federal Open Market Committee (FOMC) meeting in May. He stated that since they have made progress so far, they can take the time to analyze the data and the changing economic situation before making careful decisions. In simpler terms, Powell explained that they will continue to review and assess the interest rate decision as they have been doing. They want to consider the data and how the economic outlook is evolving before making any careful choices.
According to the CME FedWatch tool, a tool used by traders to gauge market expectations, around 79% of traders believe that the U.S. central bank will not increase interest rates at its upcoming policy meeting in the middle of June. Additionally, many traders anticipate that a reduction in interest rates may occur later this year. In simpler terms, most traders predict that the central bank will not raise interest rates during the June meeting, and some even expect a decrease in rates later in the year.
Edward Moya, a senior market analyst at Oanda, mentioned in a note on Friday that the Fed Chair seems to be comfortable with indicating patience regarding future tightening measures. He also noted that Bitcoin maintained its price increase as concerns over the debt limit were resolved and as Fed Chair Powell expressed a willingness to pause the tightening efforts of the Federal Reserve. In simpler terms, Moya observed that the Fed Chair is showing a relaxed approach to potential future tightening measures. He also pointed out that Bitcoin’s value remained stable and even increased as issues related to the debt limit were resolved, and Powell indicated a willingness to temporarily halt the tightening actions of the Federal Reserve.
In the afternoon, many of the leading cryptocurrencies experienced price gains. Ether (ETH), which is the second-largest cryptocurrency, was trading around $1,809 on Friday afternoon, reflecting a 0.8% increase. Injective Protocol’s INJ, a decentralized smart contracts platform, saw a significant jump of 10% during the day, reaching a trading price of $7.07. On the other hand, Optimism’s OP, a Layer 2 blockchain, experienced a slight decline of 3%, dropping to $1.66. In simpler terms, during the afternoon, several top cryptocurrencies saw their prices go up. Ether increased by 0.8%, while Injective Protocol’s INJ had a significant rise of 10%. However, Optimism’s OP had a small decrease of 3%.
The CoinDesk Market Index (CMI), which tracks the overall performance of the cryptocurrency market, increased by 1% for the day. In simpler terms, the overall crypto market showed a 1% gain according to the CoinDesk Market Index (CMI).
In the afternoon, the stock markets showed a slight decrease. The S&P 500 was down by 0.2%, while both the Dow Jones Industrial Average and the technology-focused Nasdaq were lower by approximately 0.35%. In simpler terms, the stock markets were slightly lower in the afternoon. The S&P 500 had a 0.2% decline, and both the Dow Jones Industrial Average and Nasdaq were down by around 0.35%.
In the bond markets, the yield on the 2-year Treasury note increased by 3 basis points, reaching approximately 4.30%. Similarly, the yield on the 10-year Treasury note rose by 4 basis points to 3.69%. In simpler terms, the interest rates on government bonds had some changes. The yield on the 2-year Treasury note went up by 3 basis points to around 4.30%, and the yield on the 10-year Treasury note increased by 4 basis points to 3.69%.
Important: This article is intended solely for informational purposes. It should not be considered or relied upon as legal, tax, investment, financial, or any other form of advice.