Bitcoin remains unaffected by the odds of a 100% rate cut from the Federal Reserve, as its price hits two-week lows, showing continued weakness even after the FOMC meeting. Despite expected market reactions to a dovish Fed, Bitcoin’s price didn’t gain the momentum traders were hoping for.
Dovish Fed Offers No Respite to Bitcoin Bulls
Following the Federal Open Market Committee’s (FOMC) decision to keep interest rates unchanged, Fed Chair Jerome Powell hinted at a possible rate cut in September. “We have stated that we do not expect it will be appropriate to reduce the target range for the federal funds rate until we have gained greater confidence that inflation is moving sustainably toward 2 percent,” Powell said. He added that recent inflation readings have bolstered this confidence, and further positive data would strengthen it.
Despite the dovish tone, Bitcoin’s price lacked momentum, dropping 2.4% the day prior and continuing to show downside. Data from Cointelegraph Markets Pro and TradingView revealed that BTC/USD hit local lows of $63,400, its lowest since July 19.
Market Reactions and Trader Sentiments
In contrast to the positive reactions from U.S. equities, the crypto market showed little interest in the prospect of a rate cut. Popular trader Crypto Chase noted that liquidity sweeps often fail if they are repeatedly anticipated. “I don’t have a strong read here, but I think anywhere from mid 61’s to 59 is possible. Bids simply depend on how aggressive/confident you are. Accept below 59 is a bad look,” he explained to his followers on X.
Another trader, CrypNuevo, suggested the potential for a short squeeze from current levels, noting that most liquidation levels were above the spot price. He predicted this could happen before the weekend.
Crypto Markets on Edge
Zooming out, trading firm QCP Capital noted that the newly launched U.S. spot Ether (ETH) exchange-traded funds (ETFs) could impact short-term crypto market sentiment. “Unfortunately, the rally in equities was not felt in crypto. Crypto experienced a broad sell-off overnight and into this morning,” the firm wrote in its latest bulletin to Telegram channel subscribers. The market remains on edge as traders closely watch daily ETH ETF outflows and additional supply pressures from Mt. Gox and the U.S. government.
QCP also highlighted the role of U.S. presidential candidates in influencing the crypto market’s future. Discussions about a sovereign Bitcoin reserve and the possibility of other nations following suit could fundamentally change the cryptocurrency landscape. “The establishment of a U.S. or sovereign ‘put’ on BTC prices may have significant implications, potentially making accumulation on dips a strategic investment approach,” they added.
Investment Risks and Market Dynamics
As always, investing in cryptocurrencies involves risks, and readers should conduct their own research when making investment decisions. The market dynamics are influenced by a range of factors, from central bank policies to geopolitical events, making it crucial for traders and investors to stay informed.
In conclusion, Bitcoin’s price continues to show weakness despite the Federal Reserve’s dovish stance and the potential for a rate cut in September. Traders remain cautious, closely monitoring market conditions and external factors that could influence price movements. The crypto market’s reaction to macroeconomic events highlights the complex interplay between traditional financial markets and digital assets.
