As a seasoned market analyst with over two decades of experience under my belt, I can confidently say that the current market environment is reminiscent of a game of musical chairs – everyone is scrambling for a seat and the music hasn’t stopped yet! The Federal Reserve’s recent rate cut and the anticipated further reduction in November are certainly stirring up the pot.
The U.S. Federal Reserve reduced interest rates by half a percentage point during its September meeting, and analysts predict another cut at their upcoming meeting in November. As a result, risky investments like stocks and alternative cryptocurrencies (altcoins) may see significant growth due to this anticipated move.
Another big rate cut on the way?
According to the CME Group’s FedWatch Tool, there’s approximately a 60.8% likelihood of another 0.5 percentage point reduction in interest rates, scheduled for announcement on November 7th during the upcoming Federal Reserve meeting. On the other hand, the possibility of a smaller 0.25 percentage point cut currently stands at around 37.2%.
Based on current market predictions, we’re looking at significant and widespread reductions. The Federal Reserve expects to make a total reduction of 1.25 percentage points by the end of the year. If this happens, it could potentially allow for an additional 0.25 percentage point cut in December.
Indeed, it’s not only the Federal Reserve that’s reducing interest rates; central banks across developed countries are following suit. Moreover, many of these banks have hinted at further rate cuts in the near future.
In an environment that encourages risk-taking, it’s expected that high-risk investments will see the quickest gains. Bitcoin (BTC/USD) could potentially benefit from this trend, and even more speculative are other cryptocurrencies. With such limited market values, some of these digital currencies have a strong possibility of significantly outperforming.
Total3 breaks out
A chart that is displaying the recent move by the altcoins, is Total3. This is the combined market capitalization of all the cryptocurrencies, with the exception of $BTC and $ETH.
Since the beginning of this year, it appears that the total market capitalization of altcoins has been forming a ‘bull flag’ pattern, similar to Bitcoin ($BTC). The graph suggests a breakout followed by a test, indicating that the overall market cap might be preparing to reach a new high.
Given the current situation, the price has reached a horizontal resistance point, which is also marked by the 0.5 Fibonacci level. There’s a chance it might get pushed back at this point, but considering the recent breakout from the bull flag and the weekly Stochastic RSI momentum indicator pointing towards strong bullish trends, it seems more probable that the price will keep rising.
Solana ($SOL) leads the way
Among the significant alternative cryptocurrencies, Solana (SOL/USD) is currently capitalizing on heightened liquidity. Today, it has surged by approximately 5%, making it a key contender to Ethereum in the layer 1 space. The price of $SOL broke through a downward trend line on September 19 and has been ascending since then.
As a crypto investor, I’m thrilled to see that the price of $SOL is breaking through the 0.5 Fibonacci resistance at around $152. If this momentum continues, my charts suggest potential targets of $162 and even $176. Exciting times ahead!
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2024-09-26 18:09