The Fed Maintains Interest Rates, How Does It Affect the Crypto Market?

CRYPTO MARKET - JAKARTA. The United States (US) central bank or the Federal Reserve (the Fed) maintains the benchmark interest rate at the level of 5.25% - 5.5% at the Federal Open Market Committee (FOMC) meeting.

Tokocrypto trader, Fyqieh Fachrur said, this is not good for the crypto market and other assets.

“Because an increase in interest rates can result in a decrease in money circulation in the community,” Fyqieh told Kontan.co.id, Tuesday (6/2).

Fyqieh explained, when interest rates increase, people tend to prefer to keep their money in low-risk assets, such as deposits because of the attractive return.

With the US bank interest rate maintained at the range of 5.25% - 5.5%, according to him, the market will tend to stagnate or go sideways.

The Fed Chairman, Jerome Powell recently also stated that a decrease in interest rates may not occur until March 2024.

“A slower interest rate cut than market expectations, makes the movement of the crypto market and Bitcoin currently suppressed in the short term,” said Fyqieh.

He mentioned, the potential for a decrease in interest rates is predicted to start occurring in June 2024, and could even decrease as much as 3-4 times gradually this year, with a target of reducing inflation to reach the 3.25% area.

“This means in the long term, the potential for this interest rate decrease is likely to drive the crypto market to experience a bullish trend, especially with the momentum from the Bitcoin (BTC) halving event,” he said.

Fyqieh said, in terms of BTC price projections, by the end of 2024 it is predicted to reach US$ 59,000 or equivalent to IDR 927 million, and could even reach the previous highest price (All-Time High) around US$ 69,000 equivalent to IDR 1 billion.

“This shows optimism towards the potential growth of Bitcoin in a longer period,” he concluded.

Meanwhile, the Chief Executive Officer of Triv.co.id, Gabriel Rey said, currently based on the CME Fed tool, in May 2024, there is a 60% chance for the Fed to lower the interest rate by about 25bps.

“So this is what will make the crypto market excited again with the decrease in this interest rate, especially there is a halving event happening around 8-10 April 2024,” Gabriel told Kontan.co.id, Tuesday (6/2).

Therefore, he predicts this year there will be many catalysts that will make the crypto market bullish, including the Ethereum spot by Blackrock which is predicted to get the green light from the SEC in June 2024.

“I think this year Bitcoin can break through the previous ATH with many of these positive catalysts,” he said.