After being rejected at $64,000, Bitcoin today fell to $62,500.
When the US Federal Reserve announced the first interest rate drop in more than four years in mid-September. The price of bitcoin shot up. As a result, many people were proven to be incorrect in their expectations following Powell’s statement on Monday.
The question arises of why BTC failed to show remarkable gains. Despite the Fed Chair’s indication of a more anticipated rate reduction this year.
Why Is There No Pump for Bitcoin?
Chair of the US Federal Reserve Jerome Powell pushed for interest. Rate reductions in late August to bring the Fed in line with other central banks. Bitcoin quickly increased in value. It is seen as a riskier asset highly impacted by macroeconomic events.
But in anticipation of the Fed’s actual rate cut, it fell sharply in the ensuing weeks, from over $65,000 to around $53,000 (September 7). This happened on September 18, and the subsequent ten days or so saw a rise in the price of Bitcoin from $59,000 to $66,500 due to the first 50 basis point rate decrease since 2020.
The Fed Chair implied in his address that two more rate cuts of 25 basis points are probably in store for this year. This would equate to a 1% reduction in total in a few months.
But BTC Dropped?
Although this is encouraging news for riskier assets like Bitcoin, the cryptocurrency could not repeat its prior performance and did not generate any significant gains. On the other hand, it has dropped more than 2% in the last day and is currently trading at $62,500, a multi-day low, after being rejected at $64,000 earlier today.
Recall that a few industry experts warned about potential price calamities for BTC after the Fed’s rate reduction. First, it was Arthur Hayes who said the rate cut could ‘cripple’ the crypto market, especially in the short term.
The research department at Bitfinex went further, indicating that BTC’s price could tumble to $45,000 after the Fed’s pivot.
