Janice R. Andrews
Bitcoin, the biggest cryptocurrency in the world, went down in value before a very important week for markets around the world, when the U.S. Federal Reserve might lower interest rates. As buyers got ready for the Fed’s next decision on monetary policy on Tuesday, Bitcoin fell by 3.9% and hit $57,505. A lot of other big cryptocurrencies, like Ether and Dogecoin, also lost value.
It is believed that the Fed’s first rate cut in more than four years will make the economy better, which is good for riskier investments like cryptocurrencies. But it’s not clear how big the cut will be, which is expected to happen on Wednesday. Investors are also paying close attention to the “dot plot,” which shows how the Fed thinks rates will change in the future, and other statements made by Fed officials.
Sean McNulty, head of trading at Arbelos Markets, stressed how important the news briefing and predictions were after the rate cut. McNulty said, “The cut is less important than the signalling during the press conference.” He added that dovish advice could cause Bitcoin to rise.
Bitcoin went up 10% last week, which was its biggest weekly gain since July, even though it recently went down. As hopes for a big rate cut grew, this surge would only get stronger. A lot of experts think the Fed will cut rates by at least 25 basis points.
Traders on the Bitcoin options market are getting ready for more instability because of the Fed’s move. Caroline Mauron, co-founder of Orbit Markets, talked about how the market is paying more attention to how this meeting turns out.
At the moment, Bitcoin’s price change seems to be mostly affected by monetary policy, even more so than political events like the upcoming U.S. presidential election. As the Fed’s decision approaches, traders will be keeping a close eye on the markets to see how they will react to the expected rate cut and the forecasts that go with it.
Bitcoin hit an all-time high of $73,798 in March, but its value has since dropped due to changing demand for U.S. exchange-traded funds (ETFs). Depending on what the Federal Reserve says, the next few days could be very important for the coin.
