Bitcoin quickly rose to $61,000 during U.S. trading hours, driving the entire cryptocurrency market higher. With expectations high for the upcoming Federal Reserve meeting, it is widely believed that the central bank will cut its benchmark federal funds rate for the first time. The rise hit a high of $61,330, the highest price since September, and although it later pulled back, it is still up more than 5% in the past 24 hours.
Other cryptocurrencies, including ETH, SOL, XRP, ADA and AVAX, also rose, but with smaller gains of only 2%-4%. The CoinDesk 20 index rose 3%, indicating positive overall market sentiment.
However, Bitcoin faces a large amount of sell order resistance in the $61,000 to $62,500 range, which may limit its further gains in the short term. The market's focus is on the upcoming Federal Reserve meeting, and it is uncertain whether the Fed will cut interest rates by 25 basis points or 50 basis points. According to the CME's FedWatch tool, the market believes that the probability of a 50 basis point cut is 63%.
Although the expectation of rate cuts boosts market confidence, a large rate cut could also trigger a panic reaction in risk asset prices, similar to the large rate cuts during the 2001 and 2007 recessions. However, the current economic situation is different, real interest rates are at a peak, and slowing inflation means that the pace of rate cuts may accelerate. The federal funds rate is expected to fall by 125 basis points by the end of 2024.
