Fed delivers rate cut "reassurance," BTC rises to reclaim $67,000
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Fed delivers rate cut "reassurance," BTC rises to reclaim $67,000
Analysts say $50,000–$52,000 is the "floor" for this bull market.
Navigating Web3 tides with focused insightsBy Mary Liu, Bitpush News
On Wednesday, the Federal Reserve kept interest rates steady in the 5.25%-5.50% range as expected. Additionally, the dot plot maintained projections for three rate cuts this year, a "reassurance pill" that eased investor concerns about the Fed adopting a more hawkish stance.
All three major U.S. equity indices closed higher, with the Dow Jones Industrial Average gaining 1.03%, the S&P 500 rising 0.89%, and the Nasdaq climbing 1.25%, all reaching record closing highs. The dollar index (DXY), which measures the greenback against other major currencies, dropped nearly 0.7% from its intraday peak, signaling improved investor risk appetite.
Following the Fed meeting, Bitcoin reversed course and rose, hitting an intraday high of $67,781 after earlier dipping to $60,793.60.
Ethereum recovered from an earlier 6% decline, rebounding to $3,379.43, after reports from Coindesk and other foreign media indicated that the Ethereum Foundation is facing investigations by unnamed government agencies and the U.S. SEC regarding classifying the asset as a security.
Solana surged 7%, while Dogecoin (DOGE), Litecoin (LTC), and Bitcoin Cash (BCH) led gains among major altcoins. Polygon's MATIC token rose 1.5%.
Cryptocurrency-related stocks rallied collectively. Coinbase climbed 11%. MicroStrategy, after falling roughly 20% earlier in the week, gained 9%. In the mining sector, Iris Energy and CleanSpark jumped 26% and 22% respectively, Marathon Digital rose 16%, and Riot Platforms increased 11%.
Fed Maintains Rate Cut Outlook
Ahead of the meeting, some investors feared that recent inflation data might lead to fewer rate cuts than markets anticipated. However, the Fed reaffirmed its December forecast of planning three rate cuts by year-end. Still, the central bank emphasized it needs further evidence that inflation is cooling before easing monetary policy, stating: "The Committee anticipates that it will be appropriate to maintain the target range until it has greater confidence that inflation is moving sustainably toward 2%."
David Russell, TradeStation's global market strategist, said: "Inflation has picked up somewhat this year, but Powell hasn't changed his tone. What reassured investors is that the dot plot still shows three rate cuts, supporting markets and risk appetite."
Zach Pandl, Managing Director at Grayscale Research, predicted in a report that the coming environment could support Bitcoin's price. He stated: "If rate cuts remain the base case, the outlook for cryptocurrencies still looks favorable. A soft landing for the economy, Fed rate cuts, and a contentious presidential election should provide supportive macro conditions for Bitcoin."
Analysts: $50K–$52K Is the Bull Market Floor
Bitcoin’s recent weakness began as traders started taking profits, after BTC surged roughly 70% from the start of the year to last Wednesday’s peak. Data from CryptoQuant showed a sharp increase on March 12 in the volume of Bitcoin sold at a profit by short-term holders. According to CoinGlass, this profit-taking triggered a surge in long liquidations of leveraged Bitcoin positions, a trend that persisted into the beginning of this week.
Additionally, momentum in Bitcoin ETFs has cooled slightly. According to BitMEX Research, Bitcoin ETFs saw a net outflow of $154.4 million on Monday—the first net outflow since March 1.
Citi analyst Alex Saunders said in a Wednesday report: "As net inflows begin to slow, the ETF-driven rally has paused at least temporarily. Since their launch, spot Bitcoin ETFs have attracted $12 billion in total inflows, but the slowing pace following Bitcoin’s recent all-time highs could lead to weaker price action."
Vijay Ayyar, Vice President for International Markets and Growth at cryptocurrency exchange CoinDCX, told Bloomberg that during previous Bitcoin bull runs, a 20%-30% pullback was normal once markets heated up. However, if Bitcoin breaks below the $60,000 threshold, it may weaken further, testing the $50,000 to $52,000 level—which would represent the floor necessary to sustain the current bull market.
Ruslan Lienkha, Market Officer at YouHodler, said Bitcoin’s long-term upward trend remains intact and viewed the recent correction as a chance to “catch a breath” ahead of Chairman Powell’s speech today. He added: "Before the next leg up to new all-time highs, we might see a period of price consolidation, fluctuating around the current level within a $10,000 range. So this is just another opportunity for long-term investors to accumulate long positions."
Lienkha also noted: "With futures funding rates beginning to normalize, frequent market volatility has calmed, indicating reduced demand for leveraged exposure to crypto. Nevertheless, open interest and trading volume remain high."
According to the CME FedWatch Tool, markets currently expect at least one rate cut before the FOMC meeting on July 31, with interest rates projected to fall by approximately 50 to 100 basis points by the end of 2024.
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