How the Upcoming FOMC Meeting Will Affect Shiba Inu Owners’ Wallets
- An overview of the influence of the upcoming FOMC meeting on the Shiba Inu demand.
- A bullish bias is forming but investors remain cautious awaiting final results.
The shiba inus The community is undoubtedly pleased with SHIB’s performance in January. But now that the month is drawing to a close, a sense of uncertainty has returned to the market, especially regarding its performance in February.
The upcoming FOMC meeting is likely to have the biggest impact on the wallets of Shiba Inu owners.
A good understanding of what the FOMC meeting is about will allow Shiba Inu owners to better understand how it impacts their portfolio.
Well, for starters, meetings are held once every three weeks and one of the main highlights is the Federal Fund rate review. The latter is the rate at which banks borrow from the Federal Reserve.
The Link Between the FOMC and Shiba Inu Price Action
The Federal Reserve uses the federal funds rate as a tool to balance the economy. A lower rate means it is cheaper to borrow, making it easier to access cash and therefore an easier investment environment.
On the other hand, a higher rate makes the loan less attractive and discourages investment.
The fed funds rate mostly increased in 2022 as part of the FED’s quantitative tightening measures to curb inflation.
Shiba Inu and the rest of the market saw a bullish push after the last FOMC meeting. Indeed, the Fed only raised interest rates by 0.5% or 50 basis points, compared to 0.75% or 75 basis points in the previous month’s announcement.
The market interpreted the fall in the FFR as a sign that the FED was slowing down its aggressive rate hike. This was also accompanied by reports indicating that the Fed was achieving positive results in its fight against inflation. The next FOMC meeting will take place on January 31 and February 1.
How will the FOMC’s upcoming FFR affect Shiba Inu?
There is speculation that the FED will increase the FFR by 25 basis points. If true, this may support bullish sentiment, and hence SHIB may come under renewed buying pressure.
Such a result would allow it to overcome the resistance we have seen in recent days at $0.0000123. price level.
If a rally is a result, then Shiba Inu investors can expect the price to rise 14% to the next Fibonacci resistance line.
If the rate hike is higher than that, it may mislead investors, triggering another selloff for Shiba Inu.
A pullback of 10% or more may be on the cards and this result will bring it closer to or below its 200-day MA.
The week ahead
Wednesday: US FOMC [25bps hike priced with 98% probability, another 25bps in March is likely]
Thursday: British and European central bank meetings
Friday: US NFP job market data [Unemployment rate to tick higher from 3.5% to 3.6%, 193k jobs exp. to have been added]
— tedtalksmacro (@tedtalksmacro) January 29, 2023
How are the markets reacting so far?
Sometimes the market begins to react even before the actual FOMC minutes are released. Some speculate that it is because people in privileged positions know about the Fed’s rate decision before it is officially released.
Thus, certain market players may have privileged access, allowing them to react accordingly.
Interestingly, Shiba Inu’s weighted sentiment metric has seen a slight uptick over the past couple of days. This may suggest that optimism is returning to the market.
Well, that’s not necessarily confirmation that investors are anticipating another surge, especially now that expectations are tilting towards a 25 basis point hike.
Meanwhile, price volatility has eased slightly over the past few days, but another push could be on the way. Indeed, the FOMC data could trigger more trading activity this week.
Trade flows also show a similar result. The supply on stock exchanges has fallen significantly in recent days, while the opposite is true for off-exchange supply.
The above measurements confirm that there is a higher demand for the SHIB than the selling pressure. Nevertheless, this is not a confirmation that the bulls will prevail.
There is still plenty of time for a bearish pivot, especially if the FOMC decides to go with a higher than expected rate hike.
Once the official data is released, we will likely see an increase in directional momentum. Traders and SHIB investors can take advantage of the subsequent trend which will provide opportunities for short-term gains.
But, for now, the best strategy would be to “wait and watch” the play of the market.
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