Major cryptocurrencies are trading higher, with key events including rate decisions from the Federal Reserve (Fed) and Bank of Japan (BOJ), and influential stock earnings reports from Mag 7 lined up for the week ahead.
The Fed should lower rates
The Federal Reserve is expected to cut its benchmark rate by 25 basis points to 4% on Wednesday, which would bring the total easing since September last year to 150 basis points.
CME federal funds futures price in a near certainty that the Fed will cut rates by 25 basis points on Wednesday and at its December meeting.
Consensus predicts further rate cuts next year, supporting a continued uptrend for bitcoin and the broader crypto market.
Bitcoin is already showing strength, rising 1.7% in the past 24 hours to $113,600, extending its three-day winning streak. The rise follows signs of seller exhaustion near the 200-day simple moving average (SMA), currently placed at $108,800.
However, prices have yet to rise above the 50-day SMA at $114,250, a widely recognized hurdle that must be overcome to re-establish near-term bullish momentum.
Other major tokens, such as ether and Solana increased by 3% in the last 24 hours. Payments-focused XRP surpassed its 200-day SMA at $2.60, hinting at renewed optimism.
Powell remains focused on jobs
The Fed’s next rate decision will be released without economic forecasts or interest rate projections, making Fed Chairman Jerome Powell’s news 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 remarks will likely bolster hopes for further easing in the coming months, potentially reinforcing 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.
The head of state, however, is expected to downplay the significance of the shutdown while sticking to September’s economic forecast, which predicted a 3% annual price rise in 2025, then falling to 2.6% in 2026. The September forecast also showed an average unemployment rate of 4.5% in the fourth quarter of 2025, eventually falling to 4.3% by 2027.
It’s worth noting that the labor market weakness began before the current government shutdown, so the lack of new jobs data due to the shutdown is unlikely to prompt Powell to reverse the September forecast, prioritizing labor concerns over inflation.
Discussion on QT
According to Scotiabank, a more significant development could come from the Fed’s balance sheet following Powell’s recent speech, in which he indicated that conditions were approaching the point at which it would be necessary to end the quantitative tightening (QT) or balance sheet liquidation program that began in 2022.
“Our long-standing plan is to stop the balance sheet runoff when reserves are slightly above the level we believe is consistent with abundant reserve conditions. We could get closer to that point in the coming months,” Powell said.
Banking system reserves recently fell below $3 trillion, exceeding a level widely seen as sufficient and signaling tightening liquidity conditions.
While the potential end of quantitative tightening (QT) does not guarantee an immediate resumption of balance sheet expansion or quantitative easing (QE), it could still increase optimism on crypto social media.
BOJ rate decision
On Thursday, the Bank of Japan (BOJ) will issue a 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 increase market volatility. “Markets are pricing in rates remaining unchanged at this meeting, but a cut of around a quarter point in December and a full rate cut by early 2026 at the January or March meetings,” Scotiabank said in a market note.
Mag 7 gains
Apple, Meta Platforms, Alphabet and Microsoft – members of the famous Mag 7 group – are among the major tech names expected to announce results this week.
Traders will carefully review these reports to gain insight into AI technology spending, which has been a key driver of the rise in risk assets since 2023. Any signs of a slowdown in this spending could trigger increased risk aversion in the market.
Trump-Xi meeting
Trade tensions between the United States and China eased on Sunday after both sides announced a trade deal was close to being reached between the world’s two largest economies.
The comments come days after the White House confirmed that President Donald Trump and his Chinese counterpart Xi Jinping were scheduled to meet in person on Thursday in South Korea. This highly anticipated meeting will take place on the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit.
Positive statements ahead of the meeting have raised expectations for a possible trade deal, meaning any disappointment could trigger a risk-averse reaction among investors.
