Bitcoin surpasses $62,000, highs of almost a month, encouraged by the Fed with a rise of 4.7% in the last 24 hours. Meanwhile, the rest of the altcoins are also trading with gains, where Avalanche stands out with a rise of 13.2% and Near Protocol (12%). Ethereum, for its part, advances 5% to $2,400.
The expected drop in the interest rates There seems to be been positive for cryptocurrencies, although it was not initially well received. Bitcoin had fallen below $60,000 after the US central bank announced the beginning of a new era of interest rate cutsalthough it has been recovering during the Asian session.
The Cryptocurrencies and risk assets appear to have reacted well to the 50bp drop, which some analysts had indicated would be negative for the markets, as it would reveal an excessive risk of recession. “The combination of a large rate cut and a dovish assessment of future cuts has caused the dollar to enter a downward spiral (and is positive for risk assets, such as stocks),” says Kathleen Brooks, research director at XTB. This strategist underlines that the Fed’s move is “good news” for the markets, as it “This movement supports economic growth and could prolong the economic cycle.”
In this regard, David Lawant, Falcon X research director, highlights that The correlation of cryptocurrencies with risk assets soared to its highest level in a year and a half. This, he explains, highlights how macroeconomics has been an increasingly important factor, especially “during regime changes such as the one we are witnessing now.”
What Powell said in his speech after the aggressive rate cut
In his appearance before the media, the president of the Federal Reserve, Jerome Powell, has assured that the central bank has started an “process” of reducing official rates which will continue in the future. On the speed of the cuts, Powell anticipated that it will depend on the available data.
However, the agency stressed that the economic outlook is uncertain, so it will be attentive to the risks that both parts of its dual mandate (inflation of 2% and full employment) run. For this reason, Powell explained that, “if the labor market were to slow unexpectedly,” then the Federal Reserve could “react by cutting more quickly.” At the moment, the market seems to be leaning towards a 25 basis point cut in view of its November meeting: the CME FedWatch tool gives a 65% probability to this option compared to the 51% it predicted a week ago.
Contrary opinions on cryptocurrency optimism
Yet, There are still those who believe that the Fed’s move will end up being negative for cryptocurrencies. Arthur Hayes, co-founder of BitMEX and chief investment officer of Maelstrom, said in an interview prior to the Fed’s decision that it would result in a brief rally, but would ultimately trigger a “nuclear catastrophe” in the market.
“One or two trading sessions into the effect, you’ll see a massive rally all because everyone thinks the lower rates go, the better. But I actually think it points to a deeper rot in the global financial system. And that will be reflected in much more depressed prices afterwards,” Hayes said.
On the business front, it is worth noting that Six Group, owner of the Swiss and Spanish stock exchanges, is studying the Creation of a cryptocurrency trading centre in Europethe Financial Times reported. According to this information, the Swiss group would make digital assets available to institutional investors, such as asset managers.
Source: Ambito
I am an author and journalist who has worked in the entertainment industry for over a decade. I currently work as a news editor at a major news website, and my focus is on covering the latest trends in entertainment. I also write occasional pieces for other outlets, and have authored two books about the entertainment industry.
