Understanding the FOMC and Its Impact on Crypto Markets
The Federal Open Market Committee (FOMC) is a branch of the Federal Reserve responsible for making key decisions about monetary policy in the United States.
The Fed's actions and messaging around interest rates and the money supply significantly impact financial markets, including cryptocurrencies like Bitcoin.
By adjusting the federal funds rate, the interest rate at which banks lend to each other overnight, the Fed influences borrowing costs across the entire U.S. economy.
Although not issued by central banks, cryptocurrencies are influenced by movements in traditional assets like stocks, bonds, commodities, and fiat currencies.
Higher interest rates can put downward pressure on risk assets like tech stocks and crypto. Conversely, a supportive monetary policy can boost these markets.
FOMO, or "fear of missing out," is common in crypto, where traders feel pressured to buy during market surges, often driven by speculation around Fed meetings.
To thrive, crypto investors need to stay informed about Fed meetings and announcements, manage risk wisely, and invest based on fundamentals rather than hype.