Impending FOMC Rate Review: What to Expect
The Federal Open Market Committee (FOMC), the key monetary policy body of the U.S. Federal Reserve, is set to announce its latest rate review later today. This highly anticipated event will also include updates on growth and inflation projections, as well as forecasts for interest rates.
Potential Impact on the Crypto Market
As the FOMC meeting unfolds, the cryptocurrency market is bracing for increased volatility. Data from Volmex suggests that we could see price swings ranging from 3% to 5% for major cryptocurrencies such as Bitcoin (BTC), Ether (ETH), and Solana (SOL). This expected fluctuation reflects the heightened sensitivity of crypto assets to macroeconomic news.
Understanding Implied Volatility
At 12:30 UTC, the one-day implied volatility index for Bitcoin (BVIV) indicated an annualized volatility of 63.32%. This translates into an anticipated 24-hour price movement of approximately 3.31%. To compute this daily change, the annualized figure is divided by the square root of 365, representing the total number of trading days in a year.
In a similar vein, the volatility indices for Ether and Solana forecasted 24-hour price fluctuations of 5.25% and 5.73%, respectively.
Contextualizing Market Volatility
While these figures might appear alarming to stock or currency traders, it’s essential to note that such price movements are not out of the ordinary for the cryptocurrency market. Although the FOMC event is significant, it is unlikely to trigger an immediate spike in volatility.
Market Expectations from the Federal Reserve
Economists and market analysts widely expect the central bank to maintain the current benchmark borrowing rates while hinting at the conclusion of its extended quantitative tightening program. However, any potential gains in risk assets might be moderated by a possible stagflationary adjustment reflected in the summary of economic projections.
As investors prepare for today’s developments, keeping an eye on these anticipated volatility metrics will be crucial for navigating the shifting landscape of cryptocurrency pricing.
