Crypto Market Reacts Unexpectedly to Fed Rate Cut, Analysts Divided on Future Momentum
Despite a widely anticipated 25-basis-point rate cut by the Federal Reserve, major cryptocurrencies including Bitcoin (BTC), XRP, and Ethereum (ETH) experienced an immediate market downturn. The Fed's decision, which aligned with market expectations and was seen by many as a bullish catalyst, instead triggered a sell-off, prompting uncertainty among investors and analysts alike.
Fed's Cautious Stance Fuels Volatility
The market dip intensified following Fed Chairman Jerome Powell's press conference, where he stated that another interest rate cut in December is "not a foregone conclusion." This cautious stance from the Fed injected significant uncertainty into the market, contradicting the year-long rally in both cryptocurrencies and traditional stocks that was largely fueled by expectations of sustained lower interest rates. Should the Fed refrain from further rate reductions in December, a strengthening dollar could pose a challenge for Bitcoin's bullish outlook. Manuel Villegas of Julius Baer advises crypto investors to brace for heightened volatility, especially with upcoming macroeconomic reports on the horizon.
Expert Forecasts Point to Potential Bitcoin Rally
Amidst the prevailing market uncertainty, some experts maintain a positive long-term view for Bitcoin. Market analyst Timothy Peterson, known for his insights on social media, projects a potential 12% surge for Bitcoin in the coming week, pushing its price towards $123,000. Peterson's analysis highlights a historical trend: since 2023, Bitcoin's post-FOMC meeting performance has, on average, been about 1.5 times its performance in the preceding week. Given Bitcoin's 4% gain leading up to the Fed's latest decision, Peterson anticipates a subsequent increase of around 7%, albeit with a wider potential range of 0-15%. This suggests that despite the immediate turbulence, once the current uncertainties resolve, Bitcoin and the broader crypto market could indeed embark on a new upward trajectory towards new record highs.
