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Weeks of declines in digital asset prices, exacerbated by prolonged macroeconomic headwinds, have rattled traders. How bleak is the mood in the cryptocurrency market today?
One measure of optimism, or lack thereof, can be found in betting markets such as polymarkets and federal funds futures traded on the Chicago Mercantile Exchange. Vague but collective predictions about when the Fed will cut interest rates reveal differences.
Traders on Polymarket, a decentralized prediction markets platform, in March gave the odds of the Federal Reserve keeping interest rates steady throughout 2024 at 7%. Now traders write with a pencil There is a 38% chance that the Fed will not cut interest rates this year.
This is much more pessimistic than the 23% chance of a zero interest rate cut. calculated Investment analytics firm Bianco Research made the announcement Tuesday. The costume used data from . CME’s FedWatch toolThis shows that CME traders have placed the odds of the Fed cutting interest rates in September at around 45%.
After expecting six rate cuts earlier this year, CME traders are now expecting just two.
“Please just lower the rates,” said Polymarket user JustKen. I left a comment. This page has traders betting about $1.2 million on the Fed’s next move. According to PolymarketJustKen’s $1,000 bet on the prediction that the Federal Reserve will cut interest rates in June is down 85%.
High interest rates generally suppress the value of risky assets such as stocks and cryptocurrencies. That’s because the payouts are less attractive than holding solid assets like cash and U.S. Treasury bonds.
After the Federal Reserve’s policy meeting in March, prediction Interest rates will be cut by three-quarters of a percentage point by the end of the year. Among the latest signs stubborn inflation Stronger than expected in the US wage increaseBut the confidence of Fed policymakers and financial market participants has become increasingly waning.
“The committee does not anticipate that it would be appropriate to reduce the target range until we have greater confidence that inflation will continue to move toward 2%,” Powell said. said On Wednesday, he mentioned the central bank’s annual inflation target.
The Bureau of Labor Statistics said in a report last month that consumer prices rose 3.5% in the 12 months through March. Annual inflation was unchanged from the February figure. cryptocurrency market slipped Immediately after the report was released.
Edited by Ryan Ozawa.
