As a seasoned crypto investor with a decade-long experience navigating market cycles, I can confidently say that the impending Federal Reserve rate cut has me optimistic about Bitcoin’s future price action. Having weathered numerous economic storms and market fluctuations, I’ve learned to read between the lines of Fed communications and market trends.
The price of Bitcoin is drawing attention due to speculation about a possible reduction in interest rates by the Federal Reserve, which may spark new energy in the market.
Significantly, the CME FedWatch Tool suggests a high probability of 74.5% that the Federal Reserve will lower interest rates by 0.25% at its upcoming meeting on December 18th. This follows two previous rate adjustments: a reduction of 50 basis points in September and another 25 basis points last month.
Should the plan come to fruition, it might cause the federal fund’s benchmark interest rate to drop within the range of 4.25% to 4.5%. This potential decrease, often seen as a sign of monetary easing, may boost the performance of Bitcoin and other cryptocurrencies.
According to Federal Reserve Governor Christopher Waller’s recent statements, he endorses the expected adjustment in interest rates due to a decline in inflation rates, as indicated by data over several months pointing towards price stability.
Likewise, Federal Reserve officials, such as Raphael Bostic, have shown they are receptive to the idea of lowering interest rates. In the past few weeks, the market’s assumptions for this reduction have grown increasingly optimistic.
Currently, the Bitcoin (BTC) price, having experienced a significant surge in November, reached a barrier at $99,655 as it aimed for $100,000. However, this upward momentum was halted by a retreat triggered by profit-taking actions from long-term investors.
Currently, a single Bitcoin is being traded at approximately $96,812, marking a 1.52% increase over the last 24 hours. The price seems to be holding steady within a range of around $93,000 to $96,000, implying that the market is waiting for a significant event or factor to drive further growth.
In conversation with Crypto News, Maksym Sakharov – one of WeFi’s co-founders – posits that a more accommodating stance from the Federal Reserve might generate the required push.
He notes that rate cuts reduce borrowing costs and increase liquidity, conditions that historically favor Bitcoin due to its inflation-hedging appeal.
Sakharov noted that when there’s an increase in available funds (liquidity), it can lead to more fiat currency being in circulation. This situation might raise fears about inflation and encourage investors to look for secure options such as Bitcoin instead.
Furthermore, Bitcoin’s price fluctuations are influenced by various elements, one of which is growing institutional investment. Sakharov highlighted that the scarcity resulting from halving and increased hoarding might propel its value beyond $100,000.
Additionally, he highlighted the positive outlook on cryptocurrency regulations under U.S. President-elect Donald Trump, an attitude that is boosting market enthusiasm.
Besides economic forecasts, there’s continued excitement in the market regarding Donald Trump becoming the U.S. President. This optimism, stemming from the belief that a president favorable to cryptocurrency would be in office for four years, has propelled Bitcoin’s price beyond $99,000.
Sakharov said.
According to Sakharov, the effects of rate reductions and continued buying of Bitcoin by institutional investors could potentially push the price of Bitcoin over $100,000 in 2021.
As the Federal Reserve’s meeting draws near, set for December 17 and 18, investors are keeping a close watch on additional economic signals that might influence market dynamics.
Future job figures and shopping patterns during holidays will provide more insight for the central bank’s choice. Yet, any surprising indications of prolonged inflation might moderate the Federal Reserve’s shift towards a more accommodating stance, which could potentially weaken Bitcoin’s optimistic forecast.
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2024-12-04 13:04