The U.S. Federal Reserve’s monetary policy committee is set to release its rate review later today, including updates on growth, inflation, and interest rate projections.
This anticipated event is expected to lead to increased volatility in the cryptocurrency market, potentially causing price fluctuations of 3% to 5% for bitcoin (BTC), ether (ETH), and solana (SOL). This insight comes from the one-day implied volatility indices associated with BTC, ETH, and SOL.
As of 12:30 UTC, the bitcoin one-day implied volatility index indicated an annualized volatility of 63.32%, suggesting a predicted 24-hour price shift of about 3.31%. This daily estimate is derived by dividing the annualized measure by the square root of 365, which accounts for the total trading days in a year.
In a similar vein, the volatility indices for ether and solana forecasted price changes of 5.25% and 5.73%, respectively, over a 24-hour period.
While these figures may appear alarming to traders in equities or currencies, they do not signify an unusual pattern within the cryptocurrency sector. Essentially, although the Fed’s announcement is crucial, it is unlikely to trigger an immediate surge in volatility.
The central bank is widely anticipated to maintain the current benchmark borrowing rate while hinting at the conclusion of its extended quantitative tightening efforts. Nonetheless, any gains in risk assets might be moderated by a possible stagflationary adjustment outlined in the economic projections.