Bitcoin traded at $89,842 and Ethereum climbed back above $3,000 as investors awaited the Federal Reserve’s decision Wednesday on its first interest rate decision of the year (first interest rate decision of the year). Markets focused on the Fed’s view of the job market because that will shape near-term policy.
Futures show a 97% chance the Fed keeps rates at the 3.5%–3.75% range. Traders on prediction market Myriad placed about a 33% chance on a larger rate cut before July (Myriad market) and maintain a company page at Myriad.
Axis co-founder Jummy Xue warned of shifting narratives and labor-market focus, saying, “While a ‘hold’ at 3.5%–3.75% is a statistical certainty, crypto traders should be wary of a ‘narrative whipsaw,'” and added that emphasis on job resilience could remove a March rate cut from consideration. Ed. note: December unemployment stood at 4.4% (Bureau of Labor Statistics).
Xue described the prevailing “debasement trade” strategy, where investors seek assets less prone to dilution as monetary easing is expected. Nansen research analyst Aurelie Barthere noted cooling in the labor market and said Powell’s dovish tone could bring forward rate-cut expectations, stating, “If Powell’s tone remains as dovish as in December, the pricing of rate cuts could be increased and brought forward before June (March and April).”
Analysts at QCP Capital also flagged other near-term risks, citing a Jan. 30 funding deadline to avoid a government shutdown, uncertainty over the CLARITY Act, and volatile currency markets (flagged).
