Journalist
Posted:
- BTC rose to $62K as the Fed easing cycle began.
- Analysts remained cautious after the Fed’s ‘aggressive’ 0.50% interest rate cut.
Bitcoin [BTC]The world’s largest cryptocurrency by market cap rose to $62K on September 18 after a surprise 0.50% interest rate cut by the Fed.
BTC reached $62.5K, a two-week high that increased September’s recovery gains to nearly 18%.
Source: BTC/USD, TradingView
However, the aggressive rate cut caught even economists surveyed by Bloomberg off guard. A recent Bloomberg poll found more economists leaning toward a 25 basis point (bps) cut, with only 9 out of 114 economists expecting a 50 basis point cut.
Although the Fed Fund Futures is accurate predicted After the Fed’s 50 bp cut, the higher odds for aggressive cuts only changed earlier this week.
What’s next for BTC?
In response to the 0.50% rate cut, Fed Chairman Jerome Powell said it was intended to keep unemployment low as inflation has cooled.
The policy change effectively signaled the start of the central bank’s easing cycle, which could boost risky assets, especially BTC.
However, market experts remained cautious as the aggressive cut was a sign of recession concerns.
BitMEX founder Arthur Hayes noted that the 50 basis point cut was a “nuclear catastrophe for the financial markets,” pointing to a deeper rot in the global financial system.
He added that assets could rise on the first or second day, followed by lower prices thereafter.
The same cautious outlook was echoed by Mett Mena, Crypto Research Strategist at 21Shares. However, Mena told AMBCrypto that the long-term easing cycle was bullish for BTC. He said,
“In the short term, a 50 basis point rate cut could signal to the market that the economy is slowing. However, over the long term, Bitcoin and other digital assets have historically thrived in low interest rate environments.”
Another cause for concern in the market for BTC was the reinforcement of the Japanese yen against the US dollar (USD), given the massive sell-off in early August after the carry trade came to a standstill.
With the upcoming decision from the BoJ (Bank of Japan) scheduled for September 20, Hayes suggested Follow this front to gauge BTC’s price direction.
In the meantime, the surge to $62,000 has liquidated more than $57 million in short positions of $75.5 million, reinforcing bullish sentiment in the near-term futures market.
Source: Coinglass