Digital asset prices are falling due to persistent macroeconomic difficulties that are worrying traders and making the market more gloomy.
A measure of optimism can be found in betting markets such as Polymarket and FED Fund Futures, which trade on the Chicago Mercantile Exchange. Vague but collective estimates of when the Federal Reserve might cut interest rates show considerable variation.
On Polymarket (a decentralized prediction platform) in March, it was recorded that 7% of traders expected the FED to keep interest rates stable throughout 2024. Currently, traders are predicting There is a 38% chance that the FED will not make any interest rate cuts this year.
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That's quite pessimistic compared to the 23% chance the Fed won't cut interest rates calculated by investment analysis firm Bianco Research on Tuesday. The group used data from CME's FEDWatch Tool , which shows that CME traders are at a 45% probability that the Fed will cut interest rates in September.
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After predicting as many as six rate cuts earlier this year, CME traders have now reduced the frequency to just two.
A Polymarket user named JustKen commented on a $2,800 bet that the Fed will cut interest rates in June out of a total of $1.2 million betting on the Fed's next moves. Currently, this young man's chance of winning is only 6%.
High interest rates often reduce the value of risky assets like stocks and cryptocurrencies because the investments become less attractive than holding solid assets like cash and Treasury bills USA.
After the policy meeting in March, the FED forecasts that there will be three interest rate cuts of 25 percentage points until the end of the year. However, amid recent signs of Dai inflation in the US with stronger-than-expected wage growth, Fed policymakers and financial market participants appear quite cautious. pessimistic about the initial forecast.
“The Committee does not believe it is appropriate to reduce the interest rate target range until there is greater confidence that inflation is moving sustainably toward 2%,”
Powell said during Wednesday's meeting
The consumer price index rose 3.5% in the 12 months through March, the U.S. Bureau of Labor Statistics said in a report last month. Showing that year-on-year inflation was unchanged from February's figures, cryptocurrency markets slid shortly after the report was released.
VIC Crypto compiled
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