Jiang Zhuoer, founder of mining pool B.TOP, said with less than 48 hours remaining before the Federal Reserve’s policy meeting, markets are assigning a 91.8% probability to a 25-basis-point rate hike. In his view, the real question is no longer whether the Fed will raise rates, but how hawkish or dovish its messaging will be after the decision.
Jiang said that since the Fed began releasing rate decisions immediately in 1994, and since CME futures-implied probabilities became widely used, there has not been a case where hike odds reached this level and the Fed ultimately chose not to raise rates. He added that, based on historical pricing one week before a meeting, the Fed has always delivered a hike when the market priced in at least 16 basis points, or roughly a 64% probability.
He also argued that if the Fed were to hold rates for political reasons, it would usually try to guide expectations in advance through officials’ remarks or media signaling, in order to avoid a major mismatch between pricing and the final decision. According to Jiang, that rate-hike expectation has already been reflected in mature markets such as U.S. equities, while crypto may be less fully priced because of its higher retail participation.
BlockBeats reported on Sept. 15 that Jiang Zhuoer, founder of mining pool B.TOP, said markets are now assigning a 91.8% probability to a 25-basis-point Federal Reserve rate hike, with less than 48 hours left before the Fed’s policy meeting.
Jiang said the market’s main uncertainty is no longer whether the Fed will raise rates, but whether its post-decision communication will lean hawkish or dovish.
Jiang points to historical pricing patterns
He said that since the Fed started publishing interest-rate decisions immediately in 1994, and since CME futures-implied probabilities became widely followed, there has been no precedent in which hike odds reached the current level and the Fed still did not raise rates.
According to Jiang, historical pricing one week ahead of a meeting shows that when the market had priced in at least 16 basis points, or about a 64% chance of a hike, the Fed ultimately went ahead with the increase every time.
He added that if the Fed were to decide against a hike for political reasons, it would usually try to manage expectations beforehand through remarks from officials or signals conveyed to the media, so the final outcome would not diverge sharply from market pricing and trigger turbulence in financial markets.
Crypto may be less fully priced than mature markets
Jiang said the expected rate hike has already been priced into mature markets such as U.S. stocks. But in crypto, where retail participation is relatively high, the degree of pricing may be less complete.
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