Bitcoin and global equities are trading lower, while the anti-risk U.S. dollar is climbing ahead of a U.S. Federal Reserve meeting later today that may inject volatility into financial markets.
The number-one cryptocurrency by market value is trading near $30,800 at press time, representing a 5% drop on the day, according to CoinDesk 20 data. European stocks and futures tied to the S&P 500 are flashing moderate losses. The Dollar Index, which tracks the greenback’s value against major fiat currencies, is hovering near 90.40, representing a 0.3% gain.
The Fed Reserve is expected to leave the interest rate unchanged near zero and maintain its liquidity-boosting, bond-purchasing plan at around $120 billion/month. If so, the status-quo decision would be unlikely to elicit much of a reaction from the markets, bitcoin‘s included.
However, stocks and bitcoin would drop and the dollar likely draw bids, if Fed Chairman Jerome Powell drops hints of a gradual unwinding of stimulus programs.
“BTC may face selling pressure if Powell signals an early taper,” Darius Sit, co-founder and managing partner at Singapore-based QCP Capital, told CoinDesk. Bitcoin, considered by many a hedge against monetary and fiscal imprudence, has moved largely in opposition to the dollar index since the March markets crash.
Some may anticipate an early exit from stimulus, given that market-based measures of long-term inflation expectations have recently risen above the Fed’s 2% target, while the U.S. and the global economy is now seen to be recovering at faster rate.
However, most observes, including QCP Capital’s Sit, don’t expect Powell to rock the boat. The Fed made it clear in August that it intends to keep interest rates low for some time even after inflation climbs above 2%.
According to FXStreet’s Yohay Elam, Powell may indirectly signal a willingness to buy more bonds by calling for increased…