FOMC Rate Review and Market Volatility

The Federal Open Market Committee (FOMC), the U.S. Federal Reserve’s monetary policy-making body, is scheduled to publish its rate review later today, including growth and inflation projections and interest rate forecasts.

This highly anticipated event is expected to create volatility in the crypto market, leading to price fluctuations of 3% to 5% in Bitcoin (BTC), Ether (ETH), and Solana (SOL). This insight comes from Volmex’s one-day implied volatility indices tied to BTC, ETH, and SOL.

As of 12:30 UTC, the Bitcoin one-day IV index (BVIV) indicated an annualized volatility of 63.32%, which translates to an expected 24-hour price swing of 3.31%. This daily movement is calculated by dividing the annualized figure by the square root of 365, the number of trading days in a year.

Similarly, Ether and Solana volatility indices forecasted 24-hour price swings of 5.25% and 5.73%, respectively.

While these figures may seem intimidating for equity or currency traders, they do not denote a significant deviation from normal crypto market behavior. In essence, although the Fed event is crucial, it is not expected to trigger an immediate volatility surge.

It is widely anticipated that the central bank will keep the benchmark borrowing cost steady while indicating an end to its prolonged quantitative tightening program. Nevertheless, any gains in risk assets may be moderated due to a potential stagflationary adjustment in the economic projections overview.