Sep 20, 2023

Many crypto traders anticipate the U.S. Federal Reserve to stick to its data-dependent stance at the upcoming FOMC meeting, offering little surprises to the market.

Video transcript

99%. That's the, those, those are the odds that the markets are giving to the fed keeping rates the way they are right now. Uh at today's meeting at, at the FO MC meeting. Well, what does that mean for the crypto markets joining us now to discuss is CEO of hash note an institutional DFI asset management company, Leo Miz Mihara. Welcome back, Leo. Good to see you again. Good to see you again too. So uh yeah, this is uh you're, you're with me on this, right? This is gonna be a boring day. Uh We're expecting so, yeah, I think the fed has been talking quite hawkish, but it seems like they're not likely to do anything this meeting. Um You know, given that what we're seeing with CP I and uh and the price stuff later the PC, I think we're, we're in for something fairly boring. They have to keep rates high for a while to continue to see those, those uh inflation numbers come down. But uh yeah, I don't expect them to do anything here. Um The one I think everyone is wondering though, what the, what the feds expectations for inflation are going forward. So we'll be looking out for what they say around their projections for both uh the inflation numbers as well as uh growth going forward. You know, one thing that, that seems to be the case is that as you mentioned before, that, that we've had a couple of small surprises to the upside talking about like, you know, 0.1% here and there. Um Do you think that the Fed just kind of decides, look, well, maybe not in September, maybe hold off till December even. We'll, we'll maybe give it a little nudge of about 25 basis points. And then that's it. We're done. Uh, it seems to be almost the way the market is looking at it. But do you think that there's at least more than enough? It, it almost that the fed has to go through with it now? Well, I think there are a couple of factors in play here, right? Like 0.1% month, over month is still over 1% over the course of a year. Um, but also, you know, we used to always say that the fed works, uh, the interest rate market works with, uh, long and variable lags, which we seem to no longer, uh, repeat as frequently anymore. But, uh, I think it makes a lot of sense for given how much the fed has hiked. They've hiked, uh, you know, historically quickly over the last year and, or last two years now. Um So it would be uh it would make sense for them to wait and see if this continues to come down. I think inflation has naturally come down within the US over the last year. Um It's been great to see inflation come down from in the 10% range down to the to the 3% range. Um I think uh I don't know if you guys look at through inflation but I think through inflation gives a really a very good real time view of what's been happening. And I've been looking at oil prices. I think that that's, that's been a huge issue, right? I mean, you know, energy prices, even though we, we like to peel that out of the core nonetheless, it's still a factor in everything and uh it's a, we're, we're close to 100 here for, for a barrel. Yeah, I think, you know, as you say, oil prices are a factor that they like to pull out of uh their core numbers and the numbers that they look at for how to deal with uh how to deal with inflation directly. So, um I would expect oil prices not to have uh as much of a factor in their decision making, but uh it does trickle into all of the other uh inflation numbers as well, like um you know, transportation for example, is very much affected by oil oil prices. Um But yeah, and the, the latest tick up has been driven largely by oil and housing. Right. And, um, that's one of the reasons I think why they're not going to, uh, necessarily combat this directly right now. Because if the tick up is due to transitory factors, they're, they're hoping to see that kind of go away as, uh as oil prices potentially revert over the next, uh, you know, 2 to 3 months leo bring this back to the crypto markets for us. What, how do you expect to see uh Bitcoin react to this matrix ports? Marcus is predicting that Bitcoin could reach $37,000 by year end. Uh Do you agree with that? Do you disagree? How, what, what do you see happening? So, very optimistic forecast, I'd love to see it get there though. Uh Well, so, you know, right now, I think Bitcoin is trading very much in a range. Uh We saw a nice breakthrough 27,000 earlier this week and um very little since then, right, we've seen uh we saw a big uptick in, in uh open interest. Uh I think it was Monday and um you know, almost a 10% uptick in open interest on Monday and then that kind of came back down and uh the the volumes on these changes have been very, very low over the last 24 hours. So we're just kind of seeing very little uh very little uh more volatility due to the fact that it's low liquidity over the last 24 hours. And, um, you know, a lot of this I think is people waiting for the Fed. This is very normal to see in macro markets going into an event like the FED, but also, uh within crypto, we're also waiting on the, um, the S ECs ruling on Binance. And so we've got a lot to wait for right now and, uh, not a whole lot to do in between. It doesn't seem like the S ECs ruling on Binance really matters though, for crypto markets. I mean, the markets have hardly reacted to any news about the SEC at all. And, you know, even if the SEC, whatever happened with finance, I mean, Binance is a global exchange, right? Their business in the US is, is essentially over anyway. So, I mean, you really think that that's going to have an impact on the market. Um I mean, I think, you know, the, whether their business is in the US or not, hardly out of say most of crypto is abroad now. Um But that said, I think the SEC still does matter. Um They're talking about bringing even more um more activity, more um more prosecution to other exchanges and other platforms as well. But if they continue to have bad momentum, I think they, they need to start slowing down Leo just a last note for you. There's some glass note data that came out recently that suggest investor confidence could be sliding in Bitcoin. You mentioned low liquidity there. What do you think is driving this and what do you think it's gonna take to get to attract new investors to Bitcoin to pump up some uh investor confidence? Yeah, I think the ETF S are the big news right now, right? We're all, we're all awaiting the ETF S that's the big consumer flow that's likely to come in. Um Other than that, I think the ecosystem just needs to find um more reasons for people to invest within this crypto or Blockchain environment and we're starting to get there. I think um the, the buzzword of the day seems to be real world assets. So uh putting on chain things that have traditionally been uh the domain of traditional finance. So things like bonds, things like real estate, things like leverage loans. Um I think we'll find that over the course of the next couple um really months to years. Uh We're gonna see more use cases for unchain finance and that'll bring more interest into the crypto ecosystem. Uh And you know, more than anything crypto is a risk asset. So, uh when we start seeing more free money flowing into the system, we'll see um renewed interest in crypto, most likely. All right, Leo, we are going to leave it there. Thanks so much for joining us this morning. It was a pleasure seeing you again. Thank you. Good to see you. Again, that was hash not CEO Leo Mihara.

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