Bitcoin and stocks await Wednesday’s Fed decision

Bitcoin is continuing to trade between $62,000 and $65,000 as it appears to be waiting for a fresh positive catalyst to finally climb to $70,000 again and break out from the downward trend channel it has found itself in over the past few months.

That catalyst could arrive with major news expected on Wednesday. Although the Bank of England is also preparing an interest rate decision, the market remains keenly focused on the decision to be made by Kevin Warsh, the new Chair of the US Federal Reserve.

Powell and Warsh

The previous chair of the Fed, Jerome Powell, was quite predictable, and the market could usually easily figure out what he would decide. Warsh is far less so (thus far), and much will also depend on the geopolitical situation, specifically the conflict between Iran and the United States, which could significantly impact the inflation outlook.

Warsh is likely to decide to pause interest rate hikes, given the uncertainty surrounding the future course of the conflict between the United States and Iran.

If he were to raise rates after all, it would be bad news for crypto and stocks, as institutional investors would then probably offload their riskier investments.

The best-case scenario is for Warsh to leave interest rates unchanged while hinting at a future rate cut; in that event, Bitcoin could climb to $70,000, driven by this new stimulus.