Bitcoin's surge past $63K follows the Fed's rate cut, but caution is vital as resistance at $64.9K remains unbroken.
While optimism rises from liquidity growth, macroeconomic factors like unemployment could impact Bitcoin's next move.
Bitcoin's potential growth hinges on closing above $64,900, while global liquidity increases may signal an uptrend ahead.
50 basis point reduction in interest rates by the Federal Reserve has sent Bitcoin soaring past $63,000. After months of sluggish activity, this indicated a shift in the market's direction. Trader caution is advised, nonetheless, as Bitcoin struggles to stay below the crucial $64,900 resistance level, which is necessary to validate a bullish breakout.
https://twitter.com/VirtualBacon0x/status/1838363103777436073 Macroeconomic Concerns and Market Volatility
Furthermore, Bitcoin has not yet broken out of the downward trend it has been in since March, even if Jerome Powell indicated additional cuts before the year's end. As a result, a lot of market analysts—VirtualBacon included—are hesitant to declare the beginning of an extended bull run. Moreover, macroeconomic factors like inflation and unemployment rates continue to be problematic, raising questions about how long this current rise will last.
The larger economic picture points to possible future instability. Historically, significant rate cuts have been followed by recessions. VirtualBacon highlighted that markets are pricing in up to 200 basis points worth of cuts over the next 12 months.
Additionally, recessions tend to hit within several months of these types of cuts. However, if unemployment stays below 4.4%, recession risks might be delayed, possibly pushing economic downturns as far as 2026.
Navigating the Current Market Landscape
Moreover, recent moves in global liquidity are fueling optimism. Global M2 money supply hit an all-time high just days ago. In the past, Bitcoin has always increased in tandem with increases in liquidity, suggesting a possible uptrend in the months ahead. Notably, the S&P 500 usually does well after rate reductions, and the performance of Bitcoin frequently tracks that of the whole market.
In order to sustain its upward trajectory, Bitcoin must close above $64,900. This would mark the first higher high since March, confirming a strong uptrend. Until that happens, the market is likely to remain choppy.
In the meantime, VirtualBacon recommends holding key assets like Bitcoin, Ethereum, and Solana. Dollar-cost averaging into high-growth sectors, including memecoins, AI, and gaming, is also advised. Traders should avoid leverage, as volatility remains high.
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