The overall cryptocurrency market has been exhibiting buying cues in the past couple of days on the back of some factors, although most investors are somewhat hesitant given the next Fed rate decision. Here's why:

1. Speculation on Fed Rate Cuts:

Some of the remaining expectations include an expectation of an upcoming cut in interest rate by the Federal Reserve sometime in September 2024. A 25 basis point cut is expected and there are some who are of the view that such a cut is likely to boost risk-on assets such as cryptocurrencies. If the sentiment which prevails during the Fed’s meeting is dovish it may lead to an increase in value of Bitcoin as well as other cryptos in as much as investors wish to invest in riskier assets given that the borrowing costs are set to decline.

2. Spot Bitcoin ETF Prospects:

Aside from the Fed, the likelihood of the SEC approving a physical Bitcoin ETF has also been giving optimism. Such a product would give crypto credibility in the traditional financial world and could open immense funds in the market. The future probability of a favourable ETF approval has been boosted by positive verdicts for Grayscale against the SEC.

3. Broader Market Trends:

Experts have however indicated that there is likely to be a lot of volatility in the future even if there will be cuts in the interest rates. There is also opinion that wider correction in stock markets could also negatively influence crypto prices. In the event that risk assets including equities come under heavy selling pressure, then $BTC stands to drop to as low as $20K.

However, there is need to be careful while investing in the crypto market since it may have been hyped due to speculative buying in anticipation of Fed rate decision and crypto ETFs. A possible pullback could have been seen as a result of a hawkish Fed sentiment or a general contraction in financial markets which you predicted would occur before the actual action of the Fed.

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