Key Points:
- Bitcoin drops 4% to $63,000, disappointing traders at the week’s start.
- Fed’s hints at future rate cuts fail to boost Bitcoin’s price.
- Market sentiment remains cautious despite Fed’s less aggressive cut plans.
- Bitcoin poised to finish Q3 with positive returns, traders eye Q4 optimism.
Bitcoin Slips to $63K, Unmoved by Fed’s Rate Cut Plans
Bitcoin began the week with a sell-off, plunging to $63,000, as the Federal Reserve’s comments about future interest rate reductions failed to provide much-needed support for the cryptocurrency. Despite Fed Chair Jerome Powell’s statements suggesting gradual rate cuts, Bitcoin’s price saw little recovery, continuing a downward trend that left traders disappointed.
On September 30, Bitcoin reached a high of $65,634 but soon fell by nearly 4%, hitting an intraday low of $63,049. By the end of the day, Bitcoin was trading around $63,344, down 3.6% over the previous 24 hours. The dip followed a recent string of gains for the cryptocurrency, which had rebounded earlier in September after the Federal Reserve implemented a 50-basis-point rate cut.
Fed’s Cautious Approach to Interest Rate Cuts
Powell’s comments at the National Association for Business Economics in Nashville indicated that while more rate cuts were expected, they would not be as aggressive as the previous reductions. He explained that if the economy continues on its current trajectory, the Fed would likely introduce two additional 0.25% cuts in 2024. However, Powell emphasized that the Federal Open Market Committee (FOMC) would remain flexible, making decisions based on ongoing economic developments.
“This is not a committee that feels like it’s in a hurry to cut rates quickly,” Powell stated, underscoring the cautious stance of the Fed. Market analysts have noted that futures trading anticipates a more conservative approach from the Fed at its upcoming November meeting, with traders projecting a quarter-point reduction. The December meeting is expected to be more decisive, with CME Group’s FedWatch Tool showing a 48% probability of a 0.5% rate cut.
Bitcoin’s Prospects for a Bullish Q4
Despite the recent downturn, many traders remain optimistic about Bitcoin’s performance in the final quarter of the year. Historically, the last quarter tends to be a positive period for the cryptocurrency market. Bitcoin’s September performance, bolstered by the earlier interest rate cut, helped to offset some of the early-month losses. Data from CoinGlass shows that Bitcoin is set to close Q3 with a modest 0.6% gain, with a 7% increase in September alone.
Although the short-term outlook appears uncertain, some traders are hopeful for a year-end rally. October, November, and December have historically been favorable months for Bitcoin, particularly during U.S. election years. Many expect the combination of seasonal trends and further rate cuts to contribute to a more bullish market for Bitcoin in Q4.
As traders await the Federal Reserve’s next move in November, the crypto market remains sensitive to macroeconomic factors. Bitcoin’s ability to rebound and capitalize on the anticipated rate cuts could determine its trajectory heading into the new year.
