Bitcoin has plunged more than 15% in the past 24 hours to around $21,000, and the overall cryptocurrency market fell below $1 trillion on Monday. Whether this week’s bearish start is followed by a major slowdown or some relief may depend on the Federal Reserve (FED) meeting next week.

In the United States, the year-over-year consumer price index has risen at its fastest rate since December 1981. Inflation has not “stabilized” as the President of the Fed, Jerome Powell, in May.

Many analysts believe this forces the Fed to adopt a hawkish stance and predict that the next rate hike will be higher than previously announced. However, others think the Fed is unlikely to surprise investors with a bigger rate hike, so the hawkish scenario remains debatable.

• However, the fear of a recession is there, and with it the bears.

In a report published by Bloomberg, Marko Kolanovic, strategist at JPMorgan Chase & Co, explained why the next move is likely to remain dovish.

“Friday’s strong CPI data led to a surge in yields, which, combined with the cryptocurrency selloff over the weekend, is clouding investor sentiment and pushing markets lower. …… However, We think the interest rate market repricing has gone too far and the Fed will be cautious about prices now entering the surprise curve.

However, JP Morgan economist Michael Feroli thinks otherwise and expects a 75 basis point hike.

Guy LeBas, meanwhile, explained the mechanics of FOMC meetings: “Most of the time there are two realistic options – A and B – but in the event of an unusual change, the price of the currency will rise. ” – but in times of unusual change or volatility, there are sometimes more. By the way, there are Cyan books archived here for the curious.

“I’m willing to bet Option A is a 50 basis point hike, followed by a faster pace of rate increases. Option B is a 75 basis point hike with a neutral bias. Option C, if serious, could include a faster pace of balance sheet repair.

LeBas was referring to a Wall Street Journal article that also claimed that a “troublesome inflation report” could lead to an unexpected Fed rate hike of 75 basis points.

The WSJ article cites earlier remarks by Fed Chairman Jerome Powell, as well as analysis by several Wall Street forecasters: “Two consumer surveys also show that household expectations for future inflation have risen the last days”.

On the one hand, Powell had said, “We need to see clear and convincing evidence that inflationary pressures are easing and inflation is coming down. If not, we need to consider more aggressive action. Looking at the inflation report, this could be a 0.75 basis point scenario.

Still, LeBas believes that “options A and B are good options for June. I lean the most towards A (hawkish 50).

“JP Morgan expects a 75 basis point hike on Wednesday. I would say that is unlikely to happen and bitcoin will reverse 50 basis points or lower.

Some investors seem to agree with the conclusion that “the market is down”.

Anything below 75 bps is generally considered good for Bitcoin, but is the US economy in too deep a hole for 50 bps to have any real impact on the market?

Mark R. Painter, president of EverGuide Financial Group, LLC, believes that 50 basis points or 75 basis points “ultimately doesn’t matter because they made a policy mistake and the short-term decision is not nothing more than closing positions”.

So the big question for Bitcoin is whether the Fed restraint can actually lead to a recovery/reversal, or if this bear market has more tears for investors to shed. As usual, both could happen, but it remains unlikely that the crypto winter will end with a 50 basis point rate hike.