The Federal Reserve has enacted its second interest rate cut this year, but the financial markets seem to lack enthusiasm. Federal Reserve Chair Jerome Powell indicated that policymakers are facing challenges in reaching a consensus on future monetary policy, casting doubt on a potential third cut in December, despite earlier indications that this was likely.
As of the latest updates, Bitcoin has experienced a sharp decline of 4% in just 24 hours, hovering around the $110,000 mark. Meanwhile, Ether has also dropped by 5%, falling below $3,900. Fadi Aboualfa, Copper’s head of research, pointed out that crypto traders had anticipated the Fed’s decision ahead of time. He emphasized that the real indicator to watch now is the inflow to Bitcoin ETFs and the stability of institutional investments.
Aboualfa explained that Bitcoin has transitioned beyond just retail market sentiment, showing signs of a more stable asset class. With the investor landscape becoming more patient, the volatility typically associated with cryptocurrencies has diminished. He mentioned that sustained stability could lead to significant long-term compounding benefits.
However, there is still caution in the air, as he warned of a potential short-term drop for Bitcoin, suggesting a rapid fall to around $108,000 could occur. Still, he noted a positive indicator: “Dips keep getting absorbed by account-building multi-month positions.” Maintaining a price above $111,000 could reinforce the existing bullish trends, although bears must demonstrate more substantial selling pressure beyond mere fluctuations.
Questions have arisen regarding the Fed’s rationale for ongoing interest rate reductions, particularly in the context of delayed data from the Bureau of Labor Statistics due to a government shutdown. Aboualfa observed a resemblance between Bitcoin’s current situation and its posture in October 2024, highlighting a cautious approach ahead of the Federal Open Market Committee (FOMC) decisions. He had identified a key price point of $114,600 as crucial for a genuine breakout, but without reaching that level, bearish pressures remain a possibility.
In terms of future developments that could impact the crypto market, GDP data is set to be released soon. Aboualfa posited that the most favorable conditions for Bitcoin would arise from stable economic growth coupled with a Fed that emphasizes logistical lags in policy rather than the need for more tightening.
According to Copper’s assessment, Bitcoin has faced lingering bearish threats but is gradually shifting from a defensive to an offensive stance. Recent trends show Bitcoin steadily recovering from a low of $103,000, producing higher lows and testing supply levels but still resisting significant upward movement beneath some persistent resistance zones.
In the wake of the Fed’s decision, which was approved with a 10-2 vote, the markets reacted modestly. One dissenting vote came from Stephen Miran, who argued for more aggressive cuts, while Jeffrey Schmid advocated for holding rates steady in light of persistent inflation. Following Powell’s press conference, both the S&P 500 and the Dow Jones saw small regressions. However, a wave of forthcoming earnings reports from tech giants like Microsoft, Amazon, and Meta—companies with a combined market capitalization of around $10 trillion—might rejuvenate market confidence, potentially providing a boost to Bitcoin in the process.
Nic Puckrin from Coin Bureau noted that the long-term investment potential for Bitcoin remains robust, yet he warned against the risks of leveraging investments in the current climate of uncertainty, which has dampened overall enthusiasm in the cryptocurrency sphere. He pointed out a bearish trend signaled by a potential double top pattern in Bitcoin and a stark decline in daily exchange volumes.
