- Bitcoin enthusiasts and investors are expecting a potential rise in Bitcoin prices following the SEC’s possible approval of a Bitcoin spot ETF, which is expected to attract more investments into the cryptocurrency.
- The Federal Reserve’s decisions regarding interest rates are crucial to Bitcoin’s price action, with the upcoming December meeting being particularly important. A drop in rates could lead to higher Bitcoin prices due to lower borrowing costs and increased demand for risky assets like Bitcoin.
- The direction of the Federal Reserve’s rate adjustments is influenced by the state of the economy, with recent robust GDP growth. If growth continues, the Fed could raise rates to curb inflation, which could slow Bitcoin’s rise. Conversely, slowing growth could lead to rate cuts, potentially fostering conditions for a Bitcoin rally similar to that of the 2020 pandemic.
Bitcoin Market Watchers are concentrated on the long-awaited SEC approval for a Bitcoin spot ETF exchange. Cryptocurrency traders and institutional finance expect the price to rise when this happens.
Meanwhile, the Fed recently held interest rates were so far stable at its November meeting. The central bank’s next move could have a significant impact on Bitcoin prices in cryptocurrency markets.
How the Fed changes the price of Bitcoin
What the Bitcoin price does next after a tremendous rally in October could depend on what the Fed does at its next meeting on December 12. As shown in a recent update on FXStreet Crypto explain:
“Typically, a fall in rates makes it less expensive to borrow funds and mine risky assets like Bitcoin for gains. An increase in demand and an influx of funds into the asset will likely cause prices to rise.
But whether the Fed raises, lowers or keeps rates steady depends on the economy. GDP grew up in a breakneck pace of 4.9% in the third quarter, driven primarily by seemingly unstoppable consumer spending. But it’s anyone’s guess what the economy will do next.
First leading indicators: GDP, interest rates
If the economy continues such phenomenal growth, then the Federal Reserve is suitable raise rates again to calm the economy and prevent inflation from spiraling out of control. This could raise headwinds that slow Bitcoin price growth.
But if a year of rising rates does their and GDP growth finally slows, the Fed will begin to seriously consider ending the 2022 high interest rate regime with a series of cuts.
Declining interest rates and increasing money supply caused the most phenomenal rise in Bitcoin price in history during the 2020 pandemic. When the Fed will start cutting rates again , it will generate huge support for the rise in Bitcoin prices.