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A prediction from Goldman Sachs regarding Federal Reserve policy could have major implications for the crypto market.
According to Wu Blockchain, who cited WSJ economist Nick Timiraos, Goldman Sachs has revised its inflation outlook, expecting the core PCE (Personal Consumption Expenditures) index to rise to 3.5% this year, up from its previous estimate of 3.0%. To offset the potential hit on growth and employment, Goldman Sachs expects the Fed to cut interest rates three times in the second half of 2024. This shoots above the Fed's projected rate cuts and the market's expectations.
During its March meeting, the Federal Reserve held the line on benchmark interest rates as it had since December but hinted that further reductions were likely later this year. Fed officials outlined their projections for the year ahead and said they expect another combined half-percentage point of rate cuts in 2025, implying two rate cuts this year.
Tomiwabold OlajideIt would be a busy week on the data front, with several key labor market reports likely to be released. Federal Reserve Chairman Jerome Powell is also slated to give a speech on Friday, which markets will closely follow.
What this means for crypto
While macroeconomic uncertainty remains, Goldman Sachs’ prediction of three rate cuts could be a positive signal for cryptocurrencies, potentially supporting price gains in the coming months.
Alex DovbnyaHistorically, rate cuts have boosted risk assets such as cryptocurrencies. Lower borrowing costs could drive more capital into the crypto market, increasing buying pressure. In the short term, analysts expect macroeconomic triggers to influence the market without a crypto-specific catalyst.
At the time of writing, Bitcoin was down 1.81% in the previous 24 hours to $81,985 during early Asian-market hours on Monday, as the weekend dip saw major tokens lose momentum after last week's brief surge.
XRP and Cardano's ADA topped losses among majors, dropping over 7% in the last 24 hours, while Solana's SOL, Dogecoin (DOGE) and Ethereum (ETH) fell 2% to 3%.
Vladislav Sopov
Dan Burgin