Upcoming FOMC Meeting Is The Most Important Ever For Bitcoin

With the Bitcoin price posting a small gain of over 1.5% over the last seven days, the market is in for a blockbuster next week.

The release of the Consumer Price Index (CPI) on December 13, Tuesday at 08:30 AM ET, will once again be “the most important CPI ever”.

Just one day later, on December 14, Wednesday at 2:00 PM ET, the final Federal Open Market Committee (FOMC) meeting of the year will take place. Remarkably, FED members will release their updated forecasts for inflation and interest rates (dot plot) at the meeting.

A Blockbuster Week

The dot plot is released only four times a year – in March, June, September, and December – and presents the FOMC’s economic projections, which look at GDP, unemployment rates, and inflation for the coming months as well as over the longer term.

Within the dot plot, each member of the Committee publishes its view of potential interest rates over the longer term.

For investors, this is extremely useful information as it allows market participants to see if the consensus path for longer-term interest rates is changing.

The markets, as well as Bitcoin investors, will therefore be eagerly watching the inflation forecasts for next year, as well as the interest rate expectations for 2023 and 2024.

As economic journalist Colby Smith wrote in November, the September dot plot showed most officials favored a slowdown to 50 basis points in December.

The question for next week will be whether the Fed, led by Powell, will put into play a slower rate hike pace of 25 basis points (bps) or even a pivot.

The Fed introduced the notion of slowing down the pace of hikes in July and the September dot plot showed support from most officials for a downshift to 50bps in December. The question today is how far Powell goes to ratify that move https://t.co/Pn8n0lh4kZ @FinancialTimes pic.twitter.com/62XOqMlm3T

— Colby Smith (@colbyLsmith) November 2, 2022

A Year-End Rally for Bitcoin?

These two events could be the “last remaining hurdles” for a year-end rally for Bitcoin, QCP Capital wrote in an analysis.

However, a higher-than-expected consumer price index and a tighter stance by the Federal Reserve could derail that rally, as was seen in the April and August reversals.

On the other hand, further disinflation could lead many to seek a continuation of the rally through the end of the year, according to QCP Capital’s analysis. It goes on to say that the question markets now face is where inflation will bottom.

Even if…