Bitcoin Price Hikes after Fed Chair Powell Signals Rate Cuts
The Bitcoin (BTC) price hit a new two-week high above $62,000 following Fed Chair Jerome Powell’s Jackson Hole speech, where he indicated the potential start of a rate-cutting cycle from the Federal Reserve. Powell expressed the need for Fed policy adjustments to support a strong labor market and confirmed confidence in inflation heading towards 2%. Market interpretation of Powell’s remarks as dovish led to a decline in US bond yields and the US Dollar Index, while US equity markets welcomed the prospect of lower interest rates and a Fed focus on economic support over quelling inflation. The S&P 500 and gold prices rose, with cryptocurrencies also experiencing positive movement.
September’s upcoming Fed meeting is expected to mark a significant policy reversal after the Fed raised interest rates in 2022/2023 to combat post-pandemic inflation. As interest rates decrease due to a more accommodating Fed policy, liquidity levels in financial markets and the economy are projected to increase. Lower risk-free interest rates drive this liquidity towards riskier assets like stocks, Bitcoin, and other cryptocurrencies, as Bitcoin prices have historically shown a positive correlation with easing liquidity conditions. The potential for a rate cut and growing liquidity conditions signal a positive outlook for BTC towards retesting July’s highs around $70,000.
Political factors could also contribute to a favorable environment for Bitcoin, with Republican candidate Donald Trump seen as a favorite for the US Presidential election in November. Reports suggest a friendly stance towards the crypto industry from Democratic nominee Kamala Harris, potentially providing additional tailwinds for Bitcoin. Longer-term supply related factors, such as a decrease in post-halving miner selling and major sell events like the return of BTC to MT Gox creditors, could also support Bitcoin price growth. Additionally, the availability of Bitcoin ETFs in the US indicates increasing bullish narratives that could overpower sell pressure and drive the price higher.
As Bitcoin price consolidates within a pennant structure and approaches its 50 and 200-day moving averages, a breakout towards $70,000 is anticipated. In the long term, Bitcoin is on track to surge towards $100,000 by late 2024 or 2025. However, it is important to note that crypto investments are high-risk, and this article is for informational purposes only and not investment advice. Investors should be aware of the potential for losing all capital when investing in cryptocurrencies. Cryptonews delivers reliable insights on digital assets, combining market knowledge and blockchain technology testing to provide accurate and impartial reporting on both established and emerging cryptocurrencies. With over a decade of coverage, Cryptonews is a trusted source in the cryptocurrency industry.
