Recently, the price of Bitcoin once dropped to around $59,000 on October 10, but then began to rise. Just five days later, on October 15, the price of Bitcoin rose to around $68,000. Not only that, many altcoins have also started to rise sharply. For example, the price of SUI has increased by more than 30% in just a few days, and some meme coins have increased by more than 50%.
Although it is gratifying that the bull market has begun, there are also certain hidden dangers in the cryptocurrency market. These hidden dangers make people wonder whether the recent sudden surge can be sustained? Will a sharp rise be followed by a sharp fall?
Bitcoin price rises, interest rate cut is not the main reason for the rise
After hitting a low of $59,000 on October 10, Bitcoin prices have since rebounded. But the strange thing is that it seems that there is no obvious reason for this rise. After all, it wasn’t long ago that the Fed suggested that its previous 50 basis point rate cut might have been the wrong decision. There are even traders in financial markets betting on the possibility that the Federal Reserve will not continue to cut interest rates at its next meeting. It seems that the current market believes that only a rate cut by the Federal Reserve can provide the market with more liquidity and thus start a rising market.
However, investors need to note that from the end of last year to the beginning of this year, the Federal Reserve did not cut interest rates. However, in the high interest rate environment at that time, the price of Bitcoin still rose from about $20k to about $60k. This is because injecting liquidity into the market does not necessarily require cutting interest rates. For example, the Japanese yen is in a low interest rate environment, while the U.S. dollar is in a high interest rate environment, and the interest rate difference between the two is large. So if investors borrow Japanese yen with low interest rates and then exchange them for U.S. dollars to invest in U.S. dollar assets with high returns, this is almost a sure-fire business, and it is also the biggest factor driving Bitcoin's bull market at the beginning of this year.
Therefore, interest rate cuts may not actually bring that much liquidity in the short term, but the larger interest rate differential between the US and Japanese currencies is the real source of current liquidity. Therefore, if the USD/JPY exchange rate grows, indicating that the interest rate difference between the two is widening, it will be more beneficial to the financial market. USD/JPY hit a low of around 140 on September 18 and has since recovered, now approaching the 150 level. It is not difficult to understand the recent overall rebound in the currency market.
As for the interest rate cut, it will naturally bring more liquidity. However, if the Federal Reserve cuts interest rates on a large scale like it did during the 2021 epidemic, otherwise the effect of the interest rate cut in the short term will definitely not be obvious, and because the interest rate cut will cause the United States to The narrowing of daily exchange rate spreads may affect the rise of financial markets. Therefore, unless a large-scale interest rate cut occurs, investors do not need to think too much about the interest rate cut in the short term.
Altcoins are generally rising, or the last bull market in 2024
After the price of Bitcoin took the lead in rising, many altcoins also ushered in a long-awaited rise. For example, Ethereum, which has been subject to too much controversy before, has recently seen its price rise from around $2,400 to around $2,600. This shows that the fundamentals of Ethereum are not so bad that it has lost market recognition. As long as the market arrives, it can still see a certain increase.
In addition, the price of public chain SUI and Aptos have also experienced good growth recently. The main narrative of the current hype for both is "Solana's replacement." Although the recent gains of the two have been considerable, investors need to pay attention to potential risks. Because the narrative of "Solana's replacement" itself determines that this is not a track that can be hyped for a long time. For one thing, Solana itself hasn't had major flaws or controversies. On the other hand, Solana's own ecosystem is relatively mature and is far beyond what SUI and Aptos-related ecosystems can match. According to a market report published by Wintermute, Solana is currently dominating token generation, with its market share rising from 60% in early September to 86%, and weekly token generation surging from 45,000 to 110,000. This shows that the market has extremely high recognition for Solana, so whether it is necessary to replace Solana is highly questionable. Therefore, both SUI and Aptos may only be available for short-term trading, and the value of long-term investment has not yet been revealed.
About BingX
Founded in 2018, BingX is the world's leading cryptocurrency exchange, providing diversified products and services such as spot, derivatives, documentary and asset management to more than 10 million users around the world. It also regularly provides mainstream currencies in response to the market. Such as Bitcoin price and Ethereum price analysis tools to meet the needs of different levels from novices to professionals. BingX is committed to providing a trustworthy platform that empowers users with innovative tools and features to enhance their trading capabilities. In 2024, BingX proudly becomes a Principal Partner of Chelsea Football Club, marking its exciting debut in the world of sports.
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