As the world of cryptocurrency continues to captivate investors and traders alike, Bitcoin and Ethereum enthusiasts are currently on the edge of their seats, eagerly anticipating the outcome of a pivotal event – the United States Federal Reserve’s interest rate decision. With Bitcoin teetering around the $34,400 mark and Ethereum flirting with the $1,800 level, the cryptocurrency market is undoubtedly at a crossroads.

In the run-up to the Federal Reserve’s decision, the top 10 cryptocurrencies by market capitalization have been enjoying a steady climb in their prices. Traders are holding their breath as they await the verdict, with a staggering 98.2% probability that the US Federal Reserve will choose to leave interest rates untouched on November 1, 2023.

Bitcoin’s Rally: A Profitable Month for Holders

October 2023 has been nothing short of impressive for Bitcoin enthusiasts. The world’s most renowned cryptocurrency has been on a relentless rally, painting a pretty picture for BTC holders. But the looming Federal Reserve interest rate decision has cast a shadow of uncertainty over this vibrant ascent. The decision could either fuel the rally further or bring it to an abrupt halt.

Ethereum and Altcoins: Tailing Bitcoin’s Moves

Ethereum, often referred to as the silver to Bitcoin’s gold, is closely following in Bitcoin’s footsteps. The majority of market participants are bracing for the Federal Reserve’s verdict to maintain the status quo, although a small minority is anticipating a rate cut from the US central bank.

US Fed Interest Rate Preview: Two Scenarios for Bitcoin and Cryptocurrency Prices

Scenario 1: US Fed Leaves Rates Unchanged

The CME Fed Watch Tool has pointed towards a staggering 98% probability that the US Federal Reserve will keep interest rates steady on November 1. A similar situation occurred in September 2023 when Bitcoin remained relatively unmoved in response to an unaltered interest rate. Consequently, Bitcoin’s price could exhibit short-term volatility, lingering around the $34,400 threshold. However, it is expected to recover its weekly gains of 4.33% soon after. Importantly, Bitcoin’s recent rally has been primarily driven by the prospect of a spot BTC ETF approval by the US Securities and Exchange Commission (SEC). Therefore, this decision holds the potential to have a more direct impact on Bitcoin’s price, irrespective of unchanged interest rates.

Scenario 2: US Fed Cuts Interest Rates

In the unlikely event of a rate cut (with a mere 1.8% probability), Bitcoin and other risk assets like altcoins are anticipated to surge. A rate cut typically makes it cheaper to borrow funds, encouraging leveraging risk assets like Bitcoin for potential gains. This leads to an increase in demand and an influx of funds, propelling asset prices to higher levels. However, it’s crucial to emphasize that an interest rate cut is a remote possibility. What most investors are truly keeping an eye on is Fed Chair Jerome Powell’s speech, which could provide insight into the likelihood of future rate hikes.

Expert Analysis: Future Rate Hikes

Yohay Elam, the lead analyst at FXStreet, has provided a valuable perspective on the Federal Reserve’s interest rate decision and the possibility of subsequent rate hikes. According to Elam, the Federal Reserve’s overnight rate currently stands at a range of 5.25%-5.50%, surpassing both measures of inflation. The US Central bank has been exercising restraint in the pace of rate hikes, with only one interest rate increase in the last three meetings.

While the majority of market participants anticipate a continuation of the “no change” trend from the US Fed, there is a hint of uncertainty in the air. The Central bank has left a window open for another hike in 2023, as reflected in their dot plot, which outlines a year-end target of 5.6%. This cautious approach allows Fed Chair Jerome Powell to keep his options open, with a strong job market being one of the factors under consideration.

Bitcoin and Ethereum Prices: Waiting on the Edge

As the fateful date approaches, Bitcoin and Ethereum, the market giants, are holding their ground, hovering around crucial levels. Bitcoin continues to trade above $34,400, while Ethereum maintains its position above the psychologically significant $1,800 mark.

In the world of cryptocurrency, the spotlight is on the Federal Reserve’s upcoming decision, and the outcome holds the potential to reshape the cryptocurrency landscape. Whether the decision leads to a continuation of the status quo or an unexpected twist, the cryptocurrency community is prepared to adapt and embrace the future with open arms.