Market Spotlight Shifts to the Federal Reserve and Powell's Guidance

As global markets await the Federal Reserve's policy decision, investors are poised to scrutinize Chair Jerome Powell's statements for hints on future monetary policy, with a 25 basis point interest rate cut largely anticipated. The cryptocurrency sector mirrors this sentiment, with the CoinDesk 20 index showing minimal movement, up 0.2%, and bitcoin rising by approximately 1%. Gold prices have slipped 0.5% after reaching a record high of $3,700, while the U.S. dollar index has seen a marginal increase of less than 0.2%. Equities markets have also experienced minimal fluctuations, with U.S. stocks declining in the previous session and European equities edging upwards, as reflected in the FTSE All-World Index's less than 0.1% advance. Over the longer term, cryptocurrencies have trailed behind equities, with the FTSE All-World Index rising 2.78% and the CoinDesk 20 adding 2.6% in the last 30 days, compared to bitcoin's 1.6% gain. This cautious market stance comes despite expectations of six interest rate cuts, three this year and three next, which would typically boost risk assets. Analysts at QCP Capital note that market expectations are positioned in a 'Goldilocks range,' representing a balance between caution and aggression, but warn that any deviation in the dot plot could challenge this balance and force investors to reassess their strategies. The true test for markets will be Powell's press conference, where a balanced message is expected to further support risk assets, while any hesitation could prompt investors to reevaluate. Despite the prevailing uncertainty, demand for spot crypto ETFs remains robust, with net inflows for spot BTC ETFs reaching around $550 million and spot ether ETFs bringing in nearly $300 million this week.