Bitcoin Drops to $63K as Fed’s Rate Cut Signals Fail to Help

Important Highlights:

Bitcoin declines by 4% to $63,000, disappointing traders at the start of the week.
The Fed’s hints of possible rate cuts do not influence Bitcoin’s price positively.
Market outlook remains wary despite the Fed’s less aggressive approach to rate cuts.
Bitcoin is set to conclude Q3 with gains, as traders anticipate a hopeful Q4.

Bitcoin started the week on a negative note, dropping to $63,000, as comments from the Federal Reserve regarding potential interest rate cuts failed to deliver the anticipated support for the cryptocurrency. Even with Fed Chair Jerome Powell’s indication of gradual rate cuts, Bitcoin’s price saw minimal recovery, continuing its downward trajectory and leaving traders disheartened.

On September 30, Bitcoin peaked at $65,634 but subsequently fell nearly 4%, reaching an intraday low of $63,049. By the day’s end, Bitcoin was trading around $63,344, representing a 3.6% decrease over the previous 24 hours. This decline followed a series of gains earlier in the month after the Federal Reserve enacted a 50-basis-point rate cut.

Fed’s Cautious Stance on Rate Cuts

Powell’s remarks at the National Association for Business Economics in Nashville suggested that while further rate cuts are anticipated, they would be less aggressive compared to previous actions. He explained that if the economy maintains its current course, the Fed could implement two additional 0.25% cuts in 2024. However, Powell stressed that the Federal Open Market Committee (FOMC) will remain adaptable, making choices based on the prevailing economic circumstances.

“This is not a committee that feels rushed to cut rates swiftly,” Powell remarked, highlighting the Fed’s cautious approach. Market analysts have observed that futures trading reflects a more conservative strategy from the Fed at its upcoming November meeting, with predictions leaning towards a quarter-point reduction. The December meeting is expected to be more decisive, with CME Group’s FedWatch Tool indicating a 48% likelihood of a 0.5% rate cut.

Bitcoin’s Outlook for a Promising Q4

Despite the recent decline, many traders are optimistic about Bitcoin’s prospects in the year’s final quarter. Historically, the last quarter is favorable for the cryptocurrency market. Bitcoin’s performance in September, aided by the earlier interest rate cut, helped mitigate some of the losses experienced at the beginning of the month. According to data from CoinGlass, Bitcoin is projected to close Q3 with a modest 0.6% gain, including a 7% rise in September alone.

While the short-term outlook seems uncertain, some traders are hopeful for a year-end rally. Historically, October, November, and December have proven to be beneficial months for Bitcoin, especially during U.S. election years. Many anticipate that the combination of seasonal trends and further rate cuts will foster a more optimistic market for Bitcoin in Q4.

As traders await the Federal Reserve’s next actions in November, the crypto market remains sensitive to macroeconomic influences. Bitcoin’s capacity to rebound and take advantage of the expected rate cuts could shape its path leading into the new year.

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