FOMC Decision Looms: Bitcoin Caught Between Rate Hike and Relief Rally

The Federal Reserve's governors will meet this week to decide on interest rates, and the decision is expected to be one of the toughest in recent memory. The data suggests that hiking rates may be the best option, but it's unclear how the Federal Reserve will act. Bitcoin and the rest of the crypto market are in limbo as a result.

Meanwhile, traditional finance is moving towards using blockchain infrastructure. US stablecoin regulations have led to global financial institutions launching regulated dollar stablecoins and operating validation networks. This has made some people wonder if Washington is leveraging crypto's technology to reinforce the dollar's dominance worldwide.

A recent string of data points suggests that inflation is not going away, and the Fed will likely act on it. The August CPI came in at 0.4% month-on-month, with an annual rate of 3.4%. This is above the Fed's 2% target. With the August jobs print already exceeding expectations, the case for a September hike is looking stronger by the day.

Bitcoin remains range-bound until the decision is announced. If the FOMC decides to raise rates with a neutral-to-dovish press conference, it could lead to a relief rally towards $82,000-$84,000. However, if they decide to hike and make hawkish statements, it could test the $74,000-$75,000 support.

Kraken's Ink has been gaining attention as a potential 'corpo chain' that could rival Robinhood Chain. With Nasdaq investing $100M into Kraken's parent company Payward, valued at $21B, some people think it's only a matter of time before xStocks spill over onto Ink. However, on-chain data shows that while xStocks is larger than Robinhood Stock tokens in market cap, it accounts for less than 5% of on-chain tokenized volume. Moreover, most xStocks trading happens on Kraken and Bybit order books, not on the blockchain itself.