Bitcoin Closes at $80,909.77 Amid Bets on a December Rate Hike
Key Facts
Bitcoin closed at $80,909.77 on October 27, up from $80,150.56 in the previous session, but below its October 21 close of $84,093.42, according to EL7 data. The close followed trading in which the cryptocurrency briefly fell to $79,496.8 before rising 1.3% to $81,119.3 at 17:42 Eastern time, according to an Investing.com report carrying a Reuters byline. The Federal Open Market Committee was holding its meeting on October 27 and 28, with the decision due at 2:00 p.m. and the press conference at 2:30 p.m. on October 28. The closing price therefore reflects later movement during the day, while the monetary policy meeting was still underway. Investors focused on what the Fed might say about inflation and its next steps, alongside market pricing of the chance of a rate increase in December.
A CME FedWatch survey cited by CoinMarketCap showed a 9.4% probability of a rate hike at the October meeting, versus about 83% for a hike by the December meeting. The gap is consistent with expectations that the Fed will leave rates unchanged at the end of the meeting, while attention turns to signals about the subsequent path, according to the Associated Press. The agency reported that investors see a very small chance of a rate increase in October as they await the wording of the statement and what it might reveal about next steps. The Associated Press said investors and economists “will scrutinize the central bank’s statement for clues to its next steps.” December bets leave risk-sensitive assets, including Bitcoin, exposed to any shift in the market’s assessment of the monetary policy path.
December bets follow the Fed’s September increase of a quarter of a percentage point in its target rate range to 3.75%-4.00%, a decision approved unanimously by a 12-0 vote. The September statement described economic activity as expanding at a solid pace, said domestic spending had remained resilient and noted that inflation remained elevated. The Associated Press reported that inflation had come in above most economists’ expectations for two consecutive months, keeping the price trajectory at the forefront of debate over upcoming rate decisions. The agency said investors and economists may read a confirmation by the Fed chair that the central bank wants to return inflation to its 2% target more quickly as a signal of a possible increase in December. This backdrop gives the Fed’s wording on inflation particular weight in assessing whether the October meeting will change market expectations for the next meeting.
In October 27 trading, an Investing.com report attributed Bitcoin’s rise to an improvement in risk appetite and a decline in oil prices, two factors that partly eased the impact of caution ahead of the Fed decision. The recovery came during the session after the price briefly fell to $79,496.8, before reaching $81,119.3 at 17:42 Eastern time. The price remained below the $80,000-$87,000 trading range seen during the previous month, according to Investing.com coverage based on Reuters. On inflation, the U.S. consumer price index rose 0.6% in September month over month after a 0.4% increase in August, while core inflation was 2.6% year over year. Upcoming price and activity data could give the market additional information as it assesses the rate path monitored by currency and risk-asset traders.
The Fed scheduled its next meeting for December 8 and 9 and decided to release the minutes of its October meeting on November 18. Before then, the U.S. Bureau of Economic Analysis planned to publish its advance estimate of third-quarter gross domestic product and September personal income and spending data on October 29 at 8:30 a.m. Eastern time. These releases come after the October meeting and add to the signals on inflation and economic activity in the Fed’s statement and press conference. The December meeting will be the next milestone for a rate decision, while meeting minutes and economic data allow the market to track factors that could inform its assessment of that decision. Market bets, as reported by the sources, remained centered on a small chance of an increase in October and a higher probability ahead of the December meeting.