BTC Bounces After Fed Signals Rate Cut — Is a Stronger Rally Coming?
Crypto markets rallied following the Fed’s third rate cut of the year, with analysts expecting a stronger recovery following the traditional post-cut trend.
Crypto markets rose somewhat following the US Federal Reserve’s widely predicted rate decrease on Wednesday, and analysts predict a stronger bounce.
Between September and December, the central bank decreased interest rates three times in a row for a total of 0.75%.
Despite being fundamentally good for cryptocurrency in the long run, each cut caused short-term sell-offs, following the typical “buy the rumour, sell the news” pattern, according to on-chain analytics firm Santiment on Thursday.
However, “typically a bounce after the dust settles,” it noted, presenting predictable trade chances.
“So far, the current rate drop has been no exception. Look for a small amount of FUD or a retail sell-off to signal that the modest post-cut-downswing has stopped.”
Lower interest rates and lower borrowing costs often boost risk appetite and capital flow into speculative assets like cryptocurrency.
Fed rate cut widely expected
CoinEx chief analyst Jeff Ko told Cointelegraph that the Fed’s most recent rate decrease was “widely expected and pretty much priced in,” but its revised dot plot, illustrating where Fed policymakers think the rate will go next, leaned slightly hawkish.”
Ko emphasized that the $40 billion in short-term Treasury purchases are simply technical steps to maintain liquidity and ease short-term rates, not a broad, stimulus-focused initiative.
However, markets still viewed the move as slightly bullish, lifting US stocks and supporting a Bitcoin rebound in line with improved risk sentiment.
Bitcoin markets are maturing
Jurrien Timmer, director of global macro at Fidelity Investments, noted on Thursday that Bitcoin (BTC$92,495) had lagged the stock market this year. However, he stated that markets were maturing compared to earlier cycles.
“It’s difficult to know in real time whether a new crypto winter has begun, but based on the shifting wave patterns in Bitcoin’s maturing network cycle, the latest bull run appears to be in a fairly advanced stage.”
During the Friday morning trading session, crypto markets had a minor increase, with Bitcoin recovering from its post-cut dive below $90,000 to reach $93,500 on Coinbase.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Cryptocurrency investments carry significant risk. Always conduct your own research before making investment decisions.