Positive Outlook for Bitcoin Amid Declining Interest Rates

Cryptonews Omar El-Sharif October 7, 2024

Positive Outlook for Bitcoin Amid Declining Interest Rates

Merkle Capital predicts rising Bitcoin prices and increased cryptocurrency investments due to declining global interest rates. Following the U.S. Federal Reserve’s rate cut, Bitcoin surged over 25% in September. Analysts express optimism about the digital asset market, citing high stablecoin supply and increased altcoin confidence, while cautioning against geopolitical risks ahead of the U.S. presidential election.

In light of prevailing global trends of declining interest rates, Merkle Capital, a prominent cryptocurrency investment advisory, anticipates a surge in Bitcoin prices and overall cryptocurrency investments throughout the current month. Mr. Woramet Chansen, an investment advisor at Merkle Capital, observed that Bitcoin experienced a notable price increase exceeding 25% in September, coinciding with the United States Federal Reserve’s first interest rate cut in four years, which decreased rates by 0.50 percentage points. He emphasized, “That was a key turning point in the market cycle, encouraging investors to take more risks and presenting an opportunity for long-term digital asset investment.” Despite Bitcoin reaching an all-time high, other cryptocurrencies have struggled to match those peaks. Mr. Woramet is optimistic regarding the growth potential of Bitcoin and alternative cryptocurrencies, particularly Ethereum, given the Federal Reserve’s dot plot from September, which suggested a cumulative total of 2.5% interest rate cuts by the end of 2026. This projection is likely to lower the fed funds rate target range to between 2.75% and 3.00% by 2026. According to Mr. Woramet, this scenario presents a favorable outlook for risk assets based on fundamental analysis and statistical trends. The current stablecoin supply is at its highest level in two years, illustrating a growing investor confidence within the cryptocurrency market. He remarked, “The stablecoin supply being at an all-time high is an important example of the increasing confidence of investors.” Moreover, data indicates that the market capitalization of altcoins, excluding Bitcoin and Ethereum, has risen by over 25%, demonstrating significant investor sentiment towards the cryptocurrency landscape, especially within the Ethereum ecosystem. Conversely, Mr. Mana Khanijou, Chief Commercial Officer at Merkle Capital, indicated potential risks arising from escalating geopolitical tensions, which could precipitate panic selling across various asset classes, undermining the current trajectory of economic recovery. However, he maintains a positive outlook for the short- to medium-term prospects for cryptocurrency investments. Mr. Sukit Udomsirikul, Managing Director and Head of Research at InnovestX Securities, noted that after surpassing the halving period, Bitcoin’s trading price is predicted to stabilize within the range of US$50,000 to US$55,000. He considers this range to be justifiable based on the existing demand and supply dynamics, with the weakening of the U.S. dollar and declining interest rates acting as additional support for Bitcoin’s price. Mr. Sukit also noted the significance of the impending United States presidential election in early November, stating that in the event of a Donald Trump victory, it would be prudent to closely monitor any forthcoming policies that could favor the cryptocurrency sector. Furthermore, he acknowledged that Bitcoin and Ethereum are increasingly perceived as alternative assets for investment, especially as investors begin utilizing spot exchange-traded funds for their acquisition.

The backdrop of this report revolves around the interplay between interest rates and cryptocurrency investment trends. With the recent cut in interest rates by the U.S. Federal Reserve, there has been an observable impact on market dynamics, particularly in the realm of cryptocurrencies such as Bitcoin and Ethereum. The behavior of digital assets often parallels traditional financial conditions, where lower interest rates typically invite increased risk-taking among investors. Thus, as monetary policy becomes more accommodative, the attractiveness of cryptocurrencies may rise as alternative investment vehicles. The effects of stablecoin supply, geopolitical factors, and upcoming political events, particularly the U.S. presidential election, also significantly influence investor sentiment in the crypto space.

In conclusion, the current trend of declining interest rates is fostering a positive environment for Bitcoin and other cryptocurrencies, as indicated by significant price growth and increasing investment confidence. The predictions of further interest rate cuts, combined with a strong stablecoin supply, suggest favorable conditions for risk assets engaged in the cryptocurrency market. However, potential geopolitical complications and political outcomes in the upcoming U.S. presidential election could pose risks to this outlook. Nonetheless, with Bitcoin’s market resilience and the burgeoning interest in Ethereum, the cryptocurrency sector appears poised for continued development and investment growth in the near future.

Original Source: www.bangkokpost.com