Bitcoin Bounces On Fed Rate Cut With Bigger Rally Ahead Predicted

Crypto markets rebounded after the Fed’s third rate cut this year, with analysts predicting a larger bounce following the typical post-cut pattern.

Crypto markets saw a slight pickup after the US Federal Reserve’s widely expected rate cut on Wednesday, and a larger bounce could be next, analysts say.

The central bank has executed three consecutive interest rate cuts totaling 0.75% over a three-month period from September to December.

Despite being fundamentally bullish for crypto in the long term, each cut triggered short-term sell-offs, following a classic “buy the rumor, sell the news” pattern, the onchain analytics firm Santiment said on Thursday.

However, there is “typically a bounce after the dust settles,” it added, which can provide predictable trading opportunities.

Lower rates and cheaper borrowing costs typically increase risk appetite and capital flowing into speculative assets, such as crypto.

CoinEx chief analyst Jeff Ko told Cointelegraph that the Fed’s latest rate cut was “widely expected and pretty much priced in,” but its updated dot plot showing where Fed policymakers think the rate is headed next “leaned slightly hawkish.”

Related: Conflicted Fed cuts rates but Bitcoin’s ‘fragile range’ pins BTC under $100K

More importantly, Ko said, the $40 billion short-term Treasury purchases are a “technical maneuver for financial system liquidity to lower short-term rates, not a large-scale, stimulus-driven program.”

Fidelity Investments’ director of global macro Jurrien Timmer looked at the longer time frame, noting on Thursday that Bitcoin (BTC) has underperformed this year compared to stock markets. However, he said that markets were maturing compared to previous cycles.

Source: CoinTelegraph