Major cryptocurrencies have been climbing in value, with noteworthy influences like interest rate decisions from both the US Federal Reserve (FRB) and the Bank of Japan (BOJ), along with upcoming financial reports from seven critical MAG stocks scheduled for next week.
Fed Likely to Cut Interest Rates
The Federal Reserve is anticipated to lower interest rates by 25 basis points to 4% this Wednesday, accumulating a total easing of 150 basis points since September.
It seems that the market is almost fully pricing in this cut during both the December and Wednesday meetings.
There’s a general consensus suggesting further cuts next year, which supports the ongoing bullish trend for Bitcoin and the wider crypto market.
Bitcoin has shown resilience, increasing 1.7% to $113,600 over the past 24 hours, and is currently on a three-day winning streak. This uptick appears to follow a decrease in selling pressure around the 200-day simple moving average at approximately $108,800.
Still, the price hasn’t managed to surpass the 50-day SMA of $114,250, a hurdle that seems crucial for regaining momentum.
Other significant cryptocurrencies like XRP have also made strides; XRP is now trading above its 200-day SMA of $2.60, indicating a potential bullish trend.
Powell Continues to Focus on Work
The upcoming interest rate decision from the Fed will be announced without an economic forecast, so Fed Chair Jerome Powell’s press conference will likely be a key event to watch.
Powell may reiterate his earlier message that the inflation driven by tariffs is expected to be temporary, but he will probably express growing concerns about risks to the job market.
This dovish tone has raised expectations for further easing, possibly bolstering risk assets.
During the conference, Powell could be asked about the effects of the ongoing U.S. government shutdown on the economy and interest rate outlook. However, he might downplay these concerns while sticking to his September predictions, which indicated a rise in prices at an annual rate of 3% for 2025, dropping to 2.6% in 2026, and projecting an unemployment rate averaging 4.5% in late 2025.
It’s worth noting that the labor market’s softness had begun prior to the shutdown and the absence of new employment data likely won’t lead Powell to change his prioritized guidance on labor versus inflation.
QT Talk
According to Scotiabank, there could be more significant updates related to the Fed’s balance sheet following Powell’s recent remarks suggesting that the end of quantitative tightening (QT) could be on the horizon.
He stated, “Our plan is to halt balance sheet reductions when reserves are slightly higher than what’s deemed adequate, and we may be getting close to that point.”
Foreign exchange reserves within the banking system have recently dipped below $3 trillion, which many view as a tight liquidity scenario.
Even though concluding QT doesn’t assure immediate balance sheet expansion or a return to quantitative easing (QE), it might still foster some positivity across crypto discussions online.
Bank of Japan Interest Rate Decision
The Bank of Japan (BOJ) is expected to announce its policy statement on Thursday, likely maintaining current interest rates. Still, new economic and interest rate projections could stir market fluctuations. While no immediate changes are expected at this meeting, a half-percentage point cut is being anticipated in December, with a full cut possible by early 2026 during the January or March meetings, as per Scotiabank’s market note.
MAG 7 Revenue
This week, major tech players like Apple, Meta Platforms, Alphabet, and Microsoft—members of the renowned MAG 7 group—are set to release their earnings reports.
Traders will be carefully examining these disclosures to gauge trends in AI-related tech spending, which has been pivotal for growth in risk assets during 2023 and beyond. Any indication of a slowdown in these expenditures could lead to a cautious market response.
Trump-Xi Meeting
On Sunday, US-China trade tensions showed signs of relief as both parties hinted at nearing a trade deal between the two largest economies.
This followed confirmation from the White House that President Donald Trump and Chinese President Xi Jinping are scheduled for an in-person meeting in South Korea on Thursday, coinciding with the Asia-Pacific Economic Cooperation (APEC) Summit.
Positive sentiments ahead of this meeting have raised hopes for a potential trade deal, but any letdown could prompt a negative reaction from investors.
