The price of Bitcoin (BTC) dipped below the $29,000 mark for the first time since June 21, registering a new monthly low. This decline comes as investors and traders anticipate the upcoming Federal Open Market Committee (FOMC) meeting, where the U.S. Federal Reserve is expected to announce its policy rate decision.
The Federal Reserve's stance on interest rates has a significant impact on various financial assets, including stocks and, more recently, cryptocurrencies. The central bank has been on a rate hike spree since March 2022, raising benchmark borrowing rates to combat inflation. This move increases borrowing costs, resulting in a slowdown in inflation and potentially affecting the rise of cryptocurrencies.
Market participants await the FOMC meeting with great interest, as the CME FedWatch Tool estimates a 99.8% probability that the Fed will announce a 25-basis-point hike. A more hawkish stance, hinting at a prolonged rate hike regime or announcing multiple rate hikes for the remainder of the year, could trigger a significant market sell-off due to concerns over a potential recession.
On the other hand, if the Federal Reserve suggests that this rate hike will be the last in the current cycle, markets may take it as a signal to move upwards. In the lead-up to the FOMC meeting, Bitcoin's trading volumes have noticeably decreased, with three consecutive days of less than $10 billion in daily volumes since last Friday.