In his recent analysis, Benjamin Cowen shed light on the complex relationship between Bitcoin’s price movements and macroeconomic events such as the Federal Open Market Committee (FOMC) meetings and Consumer Price Index (CPI) releases. The CoinSpeech team gathered the most important insights from Cowen’s informative session. You can find Benjamin Cowen’s new video below.
The Impact of FOMC Meetings on Bitcoin
Cowen highlighted the historical effects of past FOMC meetings on Bitcoin prices, noting significant volatility around these events. He emphasized that historically, the day before FOMC meetings often sees Bitcoin experiencing a sell-off, followed by mixed reactions on the day of the meetings. For instance, on the day of the last FOMC meeting, Bitcoin sold off about 4%, but it marked a local bottom for the cryptocurrency. A similar pattern was observed in previous FOMC meetings, as Cowen pointed out:
“The last FOMC was May 1st, and it ended up marking a local low for Bitcoin.”
Reactions to CPI Releases
When it comes to CPI releases, Cowen noted that Bitcoin’s reactions are highly contingent on whether the inflation data comes in above or at consensus. He provided multiple examples:
- On May 15th, when inflation data came in at consensus, Bitcoin rallied about 7.6%.
- In contrast, on April 11th, when inflation came in slightly above consensus, Bitcoin only moved up about 2% before selling off.
This indicates how sensitive Bitcoin is to inflation expectations, reinforcing Cowen’s claim,
“If the data comes in really hot, suggesting that the FED has to stay higher for even longer, then the market will often sell off.”
Rare Double-Event: FOMC and CPI on the Same Day
One particularly intriguing point Cowen made was about the upcoming rare occurrence of FOMC and CPI releases happening on the same day:
“What’s interesting about tomorrow or Wednesday June 12th is that we’re actually getting FOMC and CPI on the same day.”
This convergence of major macroeconomic events could add a layer of unpredictability, making it even harder to forecast Bitcoin’s price movements.
Market Expectations and Potential Outcomes
Looking forward, Cowen noted that the market expects interest rates to remain steady, with quantitative tightening likely continuing but at a slower pace. The direction inflation numbers take, whether they come in “hot” or “cold,” will also play a crucial role in Bitcoin’s immediate future. On the impact of potential premature rate cuts, he warned:
“If the Fed Cuts prematurely before inflation is tamed, then you run the risk of the 10-Year Yield still going up, and inflation expectations ramping back up.”
Interesting Patterns and Concluding Thoughts
Cowen noted some interesting patterns: previous FOMC meetings in the current range marked local bottoms for Bitcoin, whereas CPI releases were close to marking local tops. This conflicting information highlights the uncertainty of upcoming market reactions. He summarized:
“You have these competing views of like, well, you know, what’s going to be more… is it going to be CPI? Is it going to be FOMC?”
Overall, Cowen’s analysis provides a thorough examination of the factors influencing Bitcoin’s market movements, offering valuable insights for traders and investors.