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What effect the upcoming FOMC meeting will have on Shiba Inu portfolio holders

What effect the upcoming FOMC meeting will have on Shiba Inu portfolio holders

An examination of how the impending FOMC meeting would affect Shiba Inu demand.

Although a bullish tendency is developing, investors are nevertheless treading carefully in anticipation of the results.

The Shiba Inu community is clearly happy with SHIB’s January performance. However, as the month ends, a sense of uncertainty has returned to the market, particularly about its performance in February. 

The upcoming FOMC meeting is anticipated to have the most influence on Shiba Inu’s portfolios. 

Shiba Inu owners will be able to better comprehend how the FOMC meeting affects their portfolio if they have a strong idea of what it is. 

To begin with, the meetings are held every three weeks, with one of the main highlights being the revision of the federal funds rate. The latter is the interest rate at which banks borrow from the Fed.

The link between the FOMC and Shiba Inu price action

The Federal Funds Rate is a mechanism used by the Federal Reserve to balance the economy. A lower rate implies that borrowing is less expensive, making it easier for people to obtain cash and, as a result, improving the investment climate. 

A higher rate, on the other hand, makes borrowing less tempting and inhibits investment. 

The Federal Funds Rate has been steadily climbing since 2022 as part of the FED’s quantitative tightening tactics to combat inflation. 

Following the latest FOMC meeting, Shiba Inu and the rest of the market saw a bullish spike. This is due to the FED raising interest rates by only 0.5%, or 50 basis points, as opposed to 0.75%, or 75 basis points, in the previous month’s statement.

The decreased FFR was taken by the market as a hint that the FED was backing off its aggressive rate hike. This was backed up by news that the FED was having success in its fight against inflation. The next FOMC meeting is planned for January 31 and February 1.

How will the FOMC’s next FFR affect Shiba Inus?

The Federal Reserve is expected to raise the FFR by 25 basis points. If this proves to be true, it may encourage a bullish sentiment and increase purchasing pressure on SHIB. 

Such a result would help it overcome the resistance we’ve seen in recent days at the $0.0000123 price level.

If a rally occurs, Shiba Inu investors should expect the price to rise by up to 14% to the next Fibonacci resistance line. 

If the rate hike is bigger, it may mislead investors, resulting in another selloff for Shiba Inu. 

A 10% or greater decline is possible, bringing it closer to or below its 200-day moving average.

How are the markets reacting so far?

The market may begin to react even before the actual FOMC minutes are revealed. Some argue that this is because people in high-level positions are aware of the FED’s rate decision before it is made public.

As a result, some market participants may have preferential access, allowing them to react appropriately. 

Surprisingly, Shiba Inu’s weighted sentiment score has increased slightly in the last two days. This could indicate that market optimism is returning. 

This is not necessarily a confirmation that investors expect another jump, especially since the forecasts are pointing to a 25 basis point increase.

Meanwhile, price volatility has dropped marginally in recent days, but another increase is possible. This is due to the fact that the FOMC data may spark increased trade activity this week. 

Exchange flows reveal a similar result. The supply on exchanges has decreased dramatically in recent days, while the supply outside exchanges has increased. The measures presented above confirm that there is more demand for SHIB than there is selling pressure. Nonetheless, this is not proof that the bulls will win. 

There is still time for a negative pivot, especially if the FOMC decides to boost rates faster than expected. 

We will most likely witness an uptick in directional momentum after the official data is released. SHIB traders and investors might profit from the following trend, which will provide the potential for short-term gains. 

However, for the time being, the best plan would be to “wait and watch” how the market plays out. 

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