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⚡Fed Forecasts Single Rate Cut in 2024👮

Croxroad

13 Jun 2024 — 3 min read

☕️ GM Dear Plebs!

Here is Crox Road, your daily dose of orange pill that will turn you into a Bitcoin Maxi.

The menu for today:

✂️ Fed's Rate Cut Outlook

The Fed held policy steady, but now expects just one rate cut this year versus a projection of three rate cuts previously. Bitcoin gave up big early session gains following the Fed's hawkish turn. As expected, the Federal Open Market Committee of the U.S. Federal Reserve Wednesday held its benchmark fed funds rate range at 5.25%-5.50%, but its economic outlook now calls for just one 25 basis point rate cut this year. "In recent months, there has been modest further progress toward the Committee's 2 percent inflation objective," said the FOMC in its policy statement. The "modest" wording is notable because the previous policy statement complained of a "lack of progress" towards lower inflation.

Updating its economic projections, the Fed's median expectation for the fed funds rate at year-end 2024 is now 5.1% versus 4.6% three months ago. This means the central bank is now anticipating just one 25 basis point rate cut this year versus 75 previously. The 2025 year-end fed funds expectation is now 4.1%, suggesting 100 basis points in rate cuts next year. At his post-meeting press conference, Fed Chairman Jerome Powell said inflation remains too high and the central bank's focus remains on returning that gauge to its 2% target.

Earlier today, the U.S. Consumer Price Index report for May showed an unexpected slowdown in inflation last month. The news sent crypto, stock, and bond markets sharply higher as traders ratcheted upward their expectations for the commencement of Fed rate cuts. However, the hawkish tone from the Fed's updated projections and Powell's emphasis on persistent inflation concerns led to a reversal in market sentiment. Bitcoin, which had surged earlier in the session, relinquished its gains following the Fed's announcements.

🐋 Whale Activity Surges

According to Santiment, the supply of Bitcoin (BTC), Ethereum (ETH), and Tether (USDT) on cryptocurrency exchanges has seen significant changes. Bitcoin is still down 8.45% from its all-time high of $73,737 set on March 13, according to CoinGecko. This decline comes despite a notable increase in accumulation by Bitcoin whales, who have scooped up $1.4 billion worth of BTC in the last 24 hours. This surge in whale activity coincides with Bitcoin supply on exchanges falling to its lowest level since December 2021.

Ethereum whales have also been active, recently purchasing over 240,000 ETH, worth nearly $840 million at current prices. Industry analyst Ali Martinez, citing Sentiment data, reported this significant accumulation. However, unlike Bitcoin, the supply of Ether on cryptocurrency exchanges has increased in recent days. Currently, 17.98 million Ether, valued at $63.1 billion, is held on exchanges. This increase in exchange supply indicates that more Ether is being moved into exchanges, possibly for selling or trading, contrasting with the declining Bitcoin exchange supply.

Ether's price has also seen a recent drop, falling 8% from $3,815 on June 7 to $3,510 at the time of writing. This decline mirrors Bitcoin's downtrend, reflecting broader market conditions and possibly the influence of external economic factors, such as the Federal Reserve's hawkish tone on future interest rate policies. Despite these fluctuations, market analysts remain optimistic, with some targeting a Bitcoin price of $91.5K in the near future.

⚠️ 51 Percent Attack

A 51 percent attack occurs when a malicious actor gains control of over 50% of a cryptocurrency network's computing power. This majority control allows the attacker to manipulate the network by blocking and reversing transactions, effectively undermining the network's integrity and trustworthiness.