As a seasoned researcher with a decade of experience navigating the tumultuous world of cryptocurrencies and financial markets, I must admit that the current market dynamics are both intriguing and daunting. The green wave sweeping across the crypto landscape on a Saturday is reminiscent of a weekend rally, but the anticipation of a Federal Reserve interest rate cut next week adds an extra layer of complexity to the equation.
On Saturday, cryptocurrencies are mostly experiencing gains, as investors look forward to the possibility of the Federal Reserve reducing interest rates next week. Additionally, Bitcoin is attempting to break through the significant barrier at $60,000 once more.
Altogether, the market cap of all coins tracked by CoinGecko jumped to over $2.20 trillion.
During this recovery period, the performance of various assets also showed improvement. Gold reached a new peak at $2,580, and U.S. equities continued to regain ground. The Dow Jones saw a rise of 0.80%, while the S&P 500 and Nasdaq 100 indices experienced increases of 0.55% and 0.60% respectively.
After the United States released optimistic inflation figures on Wednesday, there was a higher likelihood that the Federal Reserve would reduce interest rates starting September 18. This data indicated that the overall consumer inflation had decreased to 2.5%, which is its lowest point in more than two years.
Investments in riskier assets such as cryptocurrencies may perform favorably if the Federal Reserve reduces interest rates, as it did in both 2020 and 2021. Conversely, their value dropped significantly when interest rates increased in 2022.
MicroStrategy continued accumulating BTC
As an analyst, I observed a surge in the value of Bitcoin following Michael Saylor’s announcement that MicroStrategy had purchased an additional 18,300 coins at approximately $1.1 billion. This acquisition underscores the growing confidence in the digital currency and could potentially drive further interest and investment.
It is the biggest corporate holders of Bitcoins with 244,800 in its portfolio.
Additionally, it leaped since indications suggested that whales and sharks (large investors) were amassing the cryptocurrency. Meanwhile, the trading volume of Bitcoin on exchanges steadily decreased, reaching its lowest point in years.
🎉 Bitcoin is almost reaching the prestigious $60K market value again for the first time since dropping below it on August 29th. The strategic combination of mid-term buying from sharks and whales, along with decreasing amounts of Bitcoin on exchanges, indicates that the cryptocurrency market might surge once more.
— Santiment (@santimentfeed) September 13, 2024
Meanwhile, data from Nansen shows that stablecoin holdings by smart money continued falling.
The chart below shows that these holdings peaked in May 2022 as Terra and its ecosystem crashed, leading to a risk-off sentiment. It then peaked in November 2022 as FTX collapsed.Â
Despite this, digital currencies such as Bitcoin, Celestia, Jasmy, and Pepe may encounter potential risks due to the possibility of Bitcoin experiencing a ‘death cross’. This is because the gap between its 50-day and 200-day moving averages has been narrowing recently.
A “death cross” might signal further price decreases, as demonstrated by Ethereum‘s 15% drop following its formation in August.
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2024-09-14 19:00