In light of the recent announcement of the year’s most eagerly awaited rate cut, Bitcoin swiftly climbed above the $62,000 mark. Federal Reserve Chair Jerome Powell disclosed that the central bank would reduce interest rates for the first time in four years. Market experts are optimistic that this development could propel Bitcoin to unprecedented heights!
A 0.5% Rate Cut!
While a 25 basis point reduction was anticipated, the Fed surprised markets with a 50 basis point cut, signaling a decisive stance on relaxing monetary policy. This move aligns with investor expectations for swift action amidst ongoing economic uncertainty. Powell revealed that the US central bank would lower interest rates by 0.5%, bringing them to a range between 4.75% and 5%. Should Bitcoin surpass its previous record of $73,000, it could potentially drive the entire $2.2 trillion cryptocurrency market higher. However, the looming uncertainty surrounding the US elections poses a potential risk to this rally.
Robert Kiyosaki, a well-known Bitcoin advocate, previously indicated on X that the prices of Bitcoin, gold, and silver are poised to surge following the Fed’s rate cuts. He commented, “the real assets could go up in price as fake money leaves fake assets and flee to real assets like real estate, gold, silver, and Bitcoin.”
Crypto Market Rallies
The cryptocurrency market responded positively, rallying 2% to reach a total market capitalization of $2.2 trillion following the much-anticipated announcement. Ether saw an impressive 5% increase, reaching $2,435 in the past 24 hours, while SOL surged over 6% to $138. The reduced interest rates and cheaper borrowing costs could encourage investors to purchase high-risk assets such as stocks and cryptocurrencies.
As Bitcoin led the broader cryptocurrency market higher, significant liquidations were triggered. Derivatives crypto traders experienced $204.3 million worth of contracts being forced to liquidate within the past 24 hours, with $130.5 million in short positions and $73.8 million in long positions, indicating a market shift as prices rose.
What Could Hold The Potential Rally?
Despite the positive outlook, several factors could impede the potential rally before it gains traction. The primary concern is the upcoming US elections. According to Bernstein analysts, a Trump victory could drive Bitcoin prices up to $90,000 this year, while a loss could see the cryptocurrency fall to as low as $30,000.
Greg Magadini, director of Derivatives at Amberdata, remarked, “While elections may create regulatory headwinds, monetary policy is providing tailwinds, making Bitcoin the most likely winner.”
$60,000: A Critical Battleground
Avinash Shekhar, CEO of Pi42, noted that a tug of war has emerged between bulls and bears. Short-term holders have been selling since August, suggesting a potential price bottom, while long-term holders are maintaining support above the $60,000 level.
Shekhar stated, “a high above $62K could steer in bullish momentum, while a breakdown below $60K could extend selling pressure.”
What Do You Think?
Will Bitcoin soon achieve its new all-time high, or will the looming headwinds impede its growth? Stay tuned to find out more.
