Bitcoin Surges Amid Rate Cut expectations
Bitcoin leaped past $115,000 last week, driven by anticipation of Federal Reserve interest rate cuts. Exchange-traded inflows surged by over $2.3 billion, adding fuel to the rally. Yet, at SundayS latest check, BTC showed a slight 0.5% dip.
The pivotal event looms on Wednesday – the Federal Open Market Committee’s interest rate decision. Economists lean heavily toward a 0.25% reduction. Data from Kalshi and Polymarket peg the probability at near certainty, corroborated by the CME FedWatch Tool.
Historical trends indicate that low-interest periods, often termed ‘easy money’ times, generally favor Bitcoin and cryptocurrencies. An exmaple is the pandemic-era rate cuts that sent BTC soaring,contrasted with the 2022 crash when rates rose.
- Q4 historically boosts Bitcoin performance, averaging over 84% returns since 2013.
However, two risks cloud the horizon. The anticipated cut might already be factored into prices,leading to a possible sell-off once announced. Additionally, a ‘rising wedge’ pattern on Bitcoin’s weekly chart signals potential downward pressure.
Technical indicators, like the Relative Strength Index and MACD, hint at bearish divergence, suggesting prices could fall despite positive trends.
while the upcoming Fed cut bodes well for Bitcoin and the crypto sector, investors face the dual threats of a probable price pullback or a hawkish Fed stance.
