Bitfinex executive says Bitcoins rally depends on rate cut
Uncertainty surrounding the U.S. economy pushed Bitcoin to its lowest point in two months, though easing inflation hints at potential monetary policy adjustments that could restore investor risk appetite.
Bitcoin (BTC) dipped below $57,000 shortly after the U.S. Federal Reserve reaffirmed its stance on maintaining current interest rates until economic indicators warrant looser measures.
“The Fed’s decision to adopt a wait-and-see approach before committing to interest rate cuts reflects cautious optimism that inflation is trending downward, yet not convincingly enough to justify immediate rate adjustments,” stated Jag Kooner, Head of Derivatives at Bitfinex.
The premier cryptocurrency demonstrated a macroeconomic correlation highlighted by Token Bay Capital’s Lucy Gazmararian last month, experiencing a more than 5% decline within 24 hours. Elevated interest rates, such as those upheld by the Fed, typically counteract demand for high-risk assets like cryptocurrencies, likely influencing market activities on Thursday.
Persisting with its 2% inflation target, the Fed has kept BTC trading between $56,800 and $70,000 post an energetic start to the year. While momentum from the approval of spot BTC ETFs and pre-halving excitement has waned, Kooner anticipated forthcoming data to provide a clearer outlook in the coming months.
Recommended reading:
– Analysts weigh in on why Bitcoin’s downtrend may endure until October
– Potential impact of tomorrow’s NFP report on Bitcoin and BTC ETFs
Kooner also indicated that Friday’s Non-Farm Payrolls (NFP) report could heighten expectations for future rate cuts or exacerbate downward pressure on Bitcoin.
“If market participants anticipate that ongoing economic uncertainty will prompt the Fed to lower rates eventually, Bitcoin’s appeal as an inflation hedge could resurge, directing investments toward spot BTC ETFs,” noted Kooner. However, he observed a lackluster response and absence of “buying the dip” sentiment since the Bitcoin halving.
James Seyffart of Bloomberg highlighted a slowdown in U.S. spot BTC ETF activity, particularly in terms of trading volumes.
Further reading:
– Core Scientific founder asserts Bitcoin remains significantly undervalued
