Bitcoin and Ether prices are surging after the Federal Reserve (FED) cut rates by 50 basis points. Bitcoin is above $62,500 and Ether is above $2,400. Will this rate cut be enough to fuel a sustainable rally, or is this just a short-term bounce?
The Federal Reserve (FED) (finally) lowers its rates
Global markets experienced a wave of panic this summer, following the Federal Reserve's (FED) decision not to cut rates, while investors had anticipated a pivot at the end of July meeting.
Maintaining key rates at 5.50% caused a drop of almost 10% on the S&P500, the index of the 500 largest American companies, a drop of more than 22% on the Nikkei, the index of the 225 largest Japanese companies, 28% on BTC and 36% on ETH.
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Last night, The Fed finally announced a 50 basis point rate cutdropping them from 5.50% to 5.00%. A decision in line with investors' expectations, although some policymakers had hoped for a more marked drop of 75 basis points, to 4.75%.
In his speech following the announcement, Fed Chairman Jerome Powell said the committee was confident in the strength of the labor market, that decisions would be made on a case-by-case basis, and that it was not being pressured by any factor. He added that The Fed could accelerate, slow down or pause rate cutting.
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What impact will this policy have on the cryptocurrency market?
The Fed's double rate cut yesterday, by 50 basis points, appears to have had a beneficial effect in the short term, with Bitcoin and Ether up 4-5%.
Bitcoin price against the dollar
Since the announcement, the BTC price grew by more than 5%rising from $59,200 to $62,400 in a matter of hours, while the price of Ether climbed by more than 4.5%from $2,310 to $2,420 over the same period.
However, Before talking about a bull run or even a bullish continuation, Bitcoin will first have to break through several resistances : that of 64,000 to 65,000 dollars, then that of 68,000 to 70,000 dollars, and finally its last historical record at 73,750 dollars.
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As for Ether, the road is longer, as it has been underperforming against BTC since 2021.. It will have to break through the resistance of $2,500 in the short term, then that of $2,700 to $2,800, before hoping to exceed $3,000 and aim for $3,500 to regain its March 2024 peaks.
Once this level is exceeded, it could open the way to its historic peak of 2021, close to $4,900.
Overall, the economic situation remains uncertain. Despite a 2% inflation target that has still not been reached, the FED is forced to pivot its monetary policy to avoid a recession in the United States. This context reinforces investors' interest in Bitcoin and its immutable monetary policy..
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Source: TradingView
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First lured by the lure of gain, I am now trapped deep into the rabbit hole. With no way out, I have no choice but to share my knowledge and transmit the passion I have for Bitcoin. I am also the creator of Adopt a Block, an educational site dedicated to Bitcoin.
Marius Farashi Tasooji
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