Interest rates could set the direction for crypto this week, with the Federal Reserve, Bank of England and Bank of Japan all expected to hold while markets look for signs that higher energy prices have brought further tightening closer.
CME’s FedWatch shows a 33% chance of a U.S. rate increase, while prediction markets odds are at 19%, up from next to nothing earlier in the month. Gregory Daco, the chief economist for EY-Parthenon, said September could be the first meaningful test of the Fed’s stance, CBS News reported.
More immediate tests come Thursday, with U.S. second-quarter GDP and June Personal Consumption Expenditure (PCE) due. Strong growth alongside persistent inflation would reinforce higher-for-longer interest-rate expectations and pressure crypto prices through higher yields and a stronger dollar, while softer readings could unwind that trade.
All 70 economists in a Reuters poll expected the BOE to hold at 3.75%, while the BOJ is forecast to remain at 1% before potentially raising rates again later this year.
