With the global economy sensitive to any changes in the US Federal Reserve’s interest rate, the price of bitcoin has seen a sharp decline. From its daily high of $105,500, the leading cryptocurrency has plummeted to $100,227 after the Fed announced a 0.25 percentage point cut in its interest rate. This move not only surprised cryptocurrency investors but also sent the market into turmoil.
The market reaction to the Fed's decision is not unusual. Typically, lower interest rates can cause prices of risky assets such as stocks, real estate, and cryptocurrencies to rise due to lower borrowing costs. However, this time, the Bitcoin market has bucked that positive trend. This suggests that investors may be considering other factors such as global economic uncertainty or uncertainty about the future of cryptocurrency regulation and financial policy.
At the moment, Bitcoin price is fluctuating between $100,900 and $101,150, which is a relatively narrow range, indicating that the market is in a temporary state of stability after the shock. It is important to observe whether this is a temporary stability before a new wave of strong volatility. Experts believe that in the short term, Bitcoin price will likely continue to see volatility due to investor sentiment and subsequent macroeconomic information.
In addition, in the relationship between interest rates and Bitcoin prices, many traders and cryptocurrency analysts have expressed the view that interest rate cuts may no longer be the bullish driver for Bitcoin as they once were, as the investment environment and approach have changed significantly in recent times. This reflects a shift in the cryptocurrency market, where investors are becoming more cautious and calculating in their investment decisions.
Speaking of the reaction of large investors, many crypto funds have increased their buying activity when Bitcoin prices are low to take advantage of good price opportunities. However, strict caution is still maintained, with thorough research on market conditions and long-term expectations of cryptocurrencies before making large buying decisions.
Derivatives trading also saw significant volatility following the Fed announcement, with large amounts of Bitcoin futures contracts liquidated, highlighting the level of uncertainty and risk investors face in the current environment.
All of these factors highlight the fact that, regardless of how the Fed adjusts interest rates, investing in Bitcoin and other crypto assets still requires a cautious approach, with a deep understanding of the market and experience in handling unexpected situations. As a result, despite short-term price fluctuations, in the long term, Bitcoin still has the potential to become one of the attractive investment channels if managed effectively and scientifically.
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