Crypto Prices: What To Expect from US FOMC & Powell’s Speech?

The crypto market is eager to see the impact of the upcoming interest rate decision by the United States Federal Reserve Open Market Committee (FOMC) on crypto prices.

Industry stakeholders are also anticipating the market trends from the Federal Reserve Chairman Jerome Powell’s speech after the policy meeting.

Economists argue that the Fed has a good reason to pause interest rates, despite President Donald Trump’s unpredictable tariff campaign threatening to drive up prices.

Will the Fed Slash Interest Rate this Week?

Jerome Powell is under extreme political pressure to speed up the timetable for any interest rate cuts this year. President Trump continues to hammer Powell publicly for not easing policy sooner.

Commenting on the matter, Nick Timiraos, Chief Economics Correspondent at The Wall Street Journal, said the Fed may cut rates this week.

He cited lower inflation as a reason for the central bank to cut. However, he noted that the uncertainty of tariffs poses a significant challenge.

Powell and many of his fellow policymakers have expressed concerns about the risks of higher prices from Trump’s tariffs.

Some analysts noted that Powell stressed that the bar for cutting rates remains high in his previous speeches.

The Federal Reserve Chairman could argue that inflation is still above the Fed’s 2% target, and the job market is consistent with full employment.

Therefore, the job market is not giving Powell and the Fed many reasons to consider a cut this week.

However, if unemployment spikes, the Fed could be forced to implement interest rate cuts earlier than anticipated.

Investors are betting they won’t see that first cut until September at the earliest.

Crypto Market Cap Outpaces Transaction Volume

Meanwhile, CryptoQuant analyst Darkfost pointed out a paradox between crypto market capitalization and transaction volume.

The analyst released a chart showing the Bitcoin Net Value to Transaction (NVT) ratio above 2.2.

The NVT ratio is a metric to assess whether Bitcoin (BTC) is overvalued or undervalued. It compares the crypto market capitalization to the volume of on-chain transactions.

A value above 2.2 suggests that the market cap is outpacing transaction volume. In the short term, this move signals a price reversal, which has often preceded corrections in crypto prices in the past.

Additionally, fewer transactions relative to market value may indicate reduced utility or BTC adoption as a medium of exchange.

The Fed policy decision may tilt the overall balance in the crypto market, with direction specific to a possible cut or not.

Combating Volatility in Bitcoin and Altcoin Crypto Prices

The prices of Bitcoin and altcoins are currently experiencing intense volatility. Bitcoin has dropped to $105,337, following a 1.2% price drop over the past day.

Top market altcoins, including Ethereum (ETH), Solana (SOL), and XRP, also face a downtrend. ETH, SOL, and XRP prices have plummeted 2.9%, 4.8%, and 1.7%, respectively.

Crypto prices reacted positively on November 7, 2024, after the Fed announced a 25 basis point rate cut.

The price of Bitcoin jumped to $75,700. Also, Ethereum experienced a 7.6% increase within 24 hours, setting its price at $2,844 at the time.

Furthermore, the cost of Dogecoin (DOGE), the leading memecoin, increased by 1.4% daily to $0.195.

Considering these past rallies, a rate cut this week could encourage more individuals to adopt crypto, potentially driving up prices.

Due to their fixed or predictable supply, cryptocurrencies like Bitcoin are often viewed as a hedge against inflation.

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