Bitcoin Faces Bearish Pressure Despite Rate Cut Expectations

Cryptonews Economy John Brightwater September 16, 2024

Bitcoin Faces Bearish Pressure Despite Rate Cut Expectations

Summary
The likelihood of a 50-basis point rate cut by the Federal Reserve has risen to 55% ahead of its meeting on Tuesday, yet Bitcoin’s price remains under bearish pressure at approximately $59,071. Fed Chair Jerome Powell’s statements could prove pivotal in determining Bitcoin’s response to monetary policy changes. Additionally, the Bank of Japan’s concurrent meeting may further influence global market conditions.

The anticipation surrounding a possible 50-basis point rate cut by the Federal Reserve has escalated to 55% on Polymarket, a notable cryptocurrency-based betting platform, as the Fed’s pivotal two-day meeting approaches this Tuesday. This rising expectation could ordinarily provide a favorable environment for assets such as Bitcoin; however, Bitcoin’s market performance remains subdued, currently trading around $59,071 per CoinGecko. The Federal Reserve has undertaken an extensive series of rate hikes since March 2022, totaling 11 increases, which have elevated interest rates to their highest levels in over two decades. This campaign aimed to mitigate inflation and stabilize the economy. However, the emerging potential for a substantial rate cut leaves the market with a dichotomy of sentiment. Sean McNulty from Arbelos Markets notes the significance of the upcoming press conference by Federal Reserve Chair Jerome Powell. A dovish outlook from Mr. Powell could serve as a catalyst for an uplift in Bitcoin’s valuation. Conversely, should the Federal Reserve shift towards a more accommodative policy stance, it could ease some of the ongoing bearish pressures affecting Bitcoin and other risk assets. In tandem with the Fed’s meeting, the Bank of Japan will announce its latest monetary policy decisions on Tuesday. This simultaneous event is expected to further influence market volatility and shape investor sentiment across global financial markets. As investors brace for possible market shifts, the focus will be firmly placed on the Federal Reserve’s forthcoming decisions and public statements, which could dramatically impact Bitcoin and other risk-related assets in the imminent future.

The current climate surrounding Bitcoin and its price determinants is largely influenced by expectations regarding Federal Reserve actions on interest rates. Since the Fed has engaged in a systematic approach to curb inflation through rate hikes, the conversation now shifts towards potential cuts, which generally favor risk assets like Bitcoin. Understanding the Fed’s previous rate adjustments and the economic context aids in comprehending the market’s current mood and the prospects for cryptocurrencies amidst central bank policies.

In summary, while the anticipation of a significant rate cut by the Federal Reserve generates positive expectations for risk assets, including Bitcoin, the cryptocurrency continues to experience bearish pressure. The outcomes of the Federal Reserve’s upcoming meeting, expected this Tuesday, alongside the Bank of Japan’s decisions, will be crucial in determining the short-term trajectory of Bitcoin’s market performance.

Original Source: pune.news