Major cryptocurrencies are trading higher, with key events including rate decisions from the Federal Reserve (Fed) and Bank of Japan (BOJ), and earnings reports from influential stocks Mag 7 scheduled for next week.
Federal Reserve Likely to Cut Rates
The Federal Reserve is widely expected to cut its policy rate by 25 basis points to 4% on Wednesday, bringing the total easing since September last year to 150 basis points.
CME Federal Reserve Funds futures are pricing in an almost certainty that the Fed will cut rates by 25 basis points on Wednesday and at its December meeting.
The consensus anticipates further rate cuts next year, supporting a continued bullish trend for bitcoin and the broader crypto market.
Bitcoin is already showing strength, rising 1.7% in the last 24 hours to $113,600, extending its three-day winning streak. The rally follows signs of exhaustion from sellers near the 200-day simple moving average (SMA), currently located at $108,800.
However, prices have yet to surpass the 50-day SMA at $114,250, a widely recognized barrier that must be overcome to restore near-term bullish momentum.
Other important tokens, such as ether and sunny have increased 3% in the last 24 hours. Payments-focused XRP has surpassed its 200-day SMA at $2.60, hinting at renewed bullish momentum.
Powell will continue to focus on jobs
The Fed’s next rate decision will be issued without economic forecasts or interest rate projections, making Fed Chair Jerome Powell’s press conference the key event to watch.
Powell is likely to reiterate September’s message that downside risks to the labor market have become more concerning, while tariff-induced inflation is expected to be transitory and short-lived.
The dovish talk will likely bolster hopes for additional easing in the coming months, which could contribute to the bullish momentum in risk assets.
Powell will most likely be asked about the impact of the current US government shutdown on his economic and interest rate projections.
However, the boss is likely to downplay the shutdown and stick to September’s economic forecasts, which showed prices would rise at an annual rate of 3% in 2025 and then fall to 2.6% in 2026. September’s forecasts also showed the unemployment rate would average 4.5% in the fourth quarter of 2025 and eventually fall to 4.3% in 2027.
Note that the labor market weakness began before the current government shutdown, so the absence of new employment data due to the shutdown is unlikely to prompt Powell to reverse September guidance prioritizing labor concerns over inflation.
QT talk
According to Scotiabank, a more significant development could come from the Federal Reserve’s balance sheet following Powell’s recent speech, in which he indicated that conditions are approaching the point at which to end quantitative tightening (QT) or the balance sheet liquidation program that began in 2022.
“Our long-stated plan is to stop balance sheet liquidation when reserves are somewhat above the level we consider consistent with ample reserve conditions. We could approach that point in the coming months,” Powell said.
The banking system’s reserves recently fell below $3 trillion, surpassing a level widely perceived as ample and signaling tighter liquidity conditions.
While a possible end to quantitative tightening (QT) does not guarantee an immediate resumption of balance sheet expansion or quantitative easing (QE), it could boost optimism on crypto social media.
BOJ rate decision
On Thursday, the Bank of Japan (BOJ) will issue a monetary policy statement with Governor Ueda taking center stage following the rate decision.
The central bank is expected to keep rates stable. However, new economic and interest rate forecasts could generate volatility in the market. “Markets are expecting no rate change at this meeting, but around half of a quarter-point cut in December and a full price cut in early 2026 at the January or March meetings,” Scotiabank said in a market note.
Mag 7 Earnings
Apple, Meta Platforms, Alphabet and Microsoft (members of the famed Mag 7 group) are among the key tech names set to announce earnings this week.
Traders will closely examine these reports for insights into AI-related technology spending, which has been a major driver of the rise in risk assets since 2023. Any sign of a slowdown in this spending could trigger further risk aversion in the market.
Trump-Xi meeting
Trade tensions between the United States and China eased on Sunday after both sides announced that a trade deal between the world’s two largest economies was near.
The comments came days after the White House confirmed that President Donald Trump and his Chinese counterpart Xi Jinping are scheduled to meet in person on Thursday in South Korea. This long-awaited meeting will take place on the sidelines of the Asia-Pacific Economic Cooperation (APEC) Summit.
Positive talk ahead of the meeting has raised expectations about a potential trade deal, meaning any disappointment could trigger a risk-averse reaction among investors.
