- The Fed is expected to cut rates by 100 basis points next year, becoming the most dovish among advanced nations' central banks.
- The stance will probably weigh on the dollar. A weaker greenback often incentivizes risk-taking in crypto and traditional markets.
If there is one thing that both crypto and traditional markets love unconditionally, it is cheap fiat liquidity. The U.S. Federal Reserve, the world's most powerful central bank, is likely to take steps in that direction next year.
The Fed is priced to be the most dovish among advanced nation central banks in 2024, with traders anticipating at least 100 basis points – or 1 percentage point – of interest-rate cuts from the current 5.25 percent to 5.5 percent range, according to Deutsche Bank Research. That will dent the U.S. dollar's appeal as a relatively high-yielding asset.
According to ING, the U.S. economy and the inflation rate are expected to slow next year, allowing the Fed to pursue a looser monetary policy.
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