BTC and crypto market rise on Fed rate reduction speculation and Q4 optimism
Bitcoin and the crypto market rose in recent hours ahead of Wednesday's FOMC meeting.
The CME FedWatch Tool predicts a 50-basis-point rate drop, which has historically accompanied crypto bull runs.
Bitcoin has done better in Q4 than preceding quarters.
After anticipation that the Federal Open Market Committee (FOMC) may lower rates by 50 basis points on Wednesday, Bitcoin (BTC) and the crypto market briefly rallied on Tuesday.
Q4 positive reduces Bitcoin-Fed rate connection.
Due to speculation that the Federal Open Market Committee (FOMC) would decrease interest rates by 50 basis points on Wednesday, cryptocurrency investors are returning.
"According to the CME FedWatch Tool, markets are pricing in a 38.0% chance of a 25-basis-points Federal Reserve interest rate cut at the September meeting, while the probability of a 50-basis-point cut has surged to 62.0%, up from 50.0% just a day earlier," Akhtar Faruqui of FXStreet
A 25-basis-point Fed decrease would be the biggest surprise since 2008. Kobeissi Letter's analyst said a 50-basis-point drop would be the biggest surprise since 2009.
Thus, Bitcoin and the crypto market are heavily influenced by Wednesday's FOMC FOMC ng. Bitcoin rose 4% in 24 hours, surpassing $60K.
Low interest rates have historically boosted Bitcoin and the crypto market. This pattern was most visible during the 2017 crypto market bull run and ICO boom, when rates were 0.75%–1% and 1%–1.25%.
The late 2020–2021 market rise is another tendency. Bitcoin rallied over 1,000% in a year when the Federal Reserve cut interest rates to 0% to 0.25% in reaction to the epidemic.
As the central bank raised rates again in 2022, the market fell. A small increase in Q1'24 was driven by the Bitcoin ETF approval.
As Q4 approaches, crypto investors expect a market rebound from Q3. Historically, Bitcoin has performed best in Q4, increasing 88.84%.
Thus, Q4 optimism and a 50-basis-point rate decrease may spark a crypto bull run.
