This conviction has led to an improvement in the risk sentiment. It should be remembered that lower interest rates are a good omen for assets such as cryptocurrencies.
Investors are thus awaiting any signals that the Fed president may give, Jerome Powell, both in his speech at the Jackson Hole symposium on Friday and in the publication on Wednesday of the minutes of the last meeting of the US central bank.
Meanwhile, Bitcoin is trading on Tuesday with gains of more than 4% at $60,700. Meanwhile, Ethereum is up 2.6% at $2,600. The rest of the altcoins are trading with gains of more than 8% led by Tron, Binance Coin (6.1%) and Shiba Inu (5.6%).
How lowering rates can affect the price of cryptocurrencies
“Bitcoin traders could benefit from a rate cut, but there is also a risk that this could signal the possibility of a recession, in which case we could see a deep Bitcoin Downward Correctionsimilar to what happened in 2019,” says Rania Gule, senior market analyst at XS.com.
As you remember, when the Fed cut rates in July 2019, Bitcoin initially rose 20% in a short-term rally, but despite two additional rate cuts that year, Bitcoin ended 2019 down 35% from its peak after the first rate cut.
“This doesn’t necessarily mean the same will happen this time, especially given the current global turbulence,” he adds. He believes that if bitcoin manages to hold above the 60,000 level today, the next rally could reach all-time highs and potentially set new peaks in the medium to long term.
From a technical perspective, he considers that “the Bearish momentum remains strong, as the Bitcoin price struggles to break through key resistance levels and momentum indicators appear weak and consolidated. However, investor behavior and recent data on Bitcoin mining activity suggest a reduction in selling pressure, which provides some support to the price.”
How much could bitcoin go up?
If we assume the price of bitcoin goes back up to 62,000, “might encounter some resistance at this level, as it aligns with a previously broken trend line and the 100-day exponential moving average around $62,226, making it a key resistance zone. Breaking this level would be considered the beginning of a strong bullish trend.“, he says.
However, if it fails to break and sustain above $62,066 for a full day, “it could trigger a drop towards $57,115, followed by a possible drop to revisit the daily support level at $49,917.” On the other hand, if the bitcoin price manages to close above $62,066, “A rally towards the August 2 high of $69,596 could be likely. This could lead to a further rise to test the weekly resistance at $69,648,” he concludes.
Source: Ambito
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