Decline in Bitcoin and US Stocks Following Fed Chair Powell’s Rate Cut Signals
On September 30th, Bitcoin dropped 3.5% to $63K following Federal Reserve Chair Jerome Powell’s comments signaling a slower pace of rate cuts, leading to a shift in market expectations from a 50 basis point cut to a preference for 25 basis points. The upcoming US labor market updates and geopolitical tensions may impact Bitcoin’s performance, with key support at $63K.
During the trading session on Monday, September 30th, Bitcoin (BTC) experienced a decline alongside US stocks, decreasing by 3.5% to reach $63,000 following remarks made by Federal Reserve Chair Jerome Powell regarding anticipated interest rate cuts. Mr. Powell, speaking at the National Association for Business Economics conference in Nashville, indicated a cautious stance regarding the pace of rate adjustments, expressing no clear preference for accelerating or decelerating rate cuts. He projected that if economic conditions develop as expected, the Federal Reserve might enact two additional cuts, each by 25 basis points, before the year’s conclusion. In light of Mr. Powell’s statements, market expectations surrounding Federal Reserve rate cuts have shifted significantly. Previously, traders anticipated a more aggressive 50 basis point cut in November, reflective of a similar move implemented in September. However, following Powell’s comments, the likelihood of a 25 basis point cut increased to 61.8%, while expectations for a 50 basis point reduction diminished to 38.2%, down from 53% recorded the previous Friday. This shift in sentiment concerning interest rate expectations came just days before critical US labor market updates. Interestingly, Bitcoin demand in the US saw a significant reduction, as evidenced by the Coinbase Premium Index, which demonstrated a drop from nearly $500 million in daily inflows through US spot Bitcoin ETFs to merely $61.3 million on the aforementioned Monday. Furthermore, the $63,000 price level has been identified as vital short-term support, as it aligns with the realized price for short-term holders since mid-September. At the time of reporting, Bitcoin was priced at approximately $63.9K. Complicating the market dynamics, the prevailing geopolitical tensions in the Middle East may also pose challenges to Bitcoin’s performance, particularly as expectations regarding an “Uptober” rally loom. Nevertheless, a potential positive development includes signals of an impending end to the Fed’s quantitative tightening policies, as more financial institutions begin utilizing the Fed’s Repo facility, thereby potentially enhancing liquidity and bolstering risk assets.
The article addresses the immediate impacts of comments made by Federal Reserve Chair Jerome Powell on the financial markets, particularly regarding Bitcoin and US stocks. Mr. Powell’s commentary on interest rate reductions has caused volatility in market expectations. As investors await upcoming labor market data, movements in the cryptocurrency space, especially Bitcoin, provide a barometer for broader market sentiment. The interplay of interest rate quantification with geopolitical factors further adds layers of complexity to current market assessments. Understanding these dynamics is essential for evaluating potential shifts in Bitcoin and stock market trends.
In conclusion, the remarks by Federal Reserve Chair Jerome Powell have significantly influenced market expectations regarding interest rates, leading to a decline in Bitcoin’s price and US stocks. With traders adjusting their forecast for rate cuts, Bitcoin’s performance remains closely linked to broader economic indicators and geopolitical developments. The steadfast support level at $63,000 may be pivotal in determining Bitcoin’s future trajectory amidst evolving market conditions.
Original Source: ambcrypto.com
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