Federal Reserve Chairman Jerome Powell
Market analysts suggest the decline in cryptocurrency prices is a short-term dip. Despite being in a bear market, Bitcoin and other cryptocurrencies are showing bullish signals. Bitcoin is still struggling to cross the $70,000 mark, but its performance in August, leading up to the potential rate cuts, will be closely watched.
On July 31, the US Federal Reserve concluded a two-day Federal Open Market Committee (FOMC) meeting, deciding to keep benchmark interest rates unchanged at 5.25% – 5.50%. This decision met Wall Street’s expectations and marked the eighth consecutive meeting without a rate change.
According to Santiment, the FOMC’s decision to maintain current interest rates led to an initial dip in cryptocurrency prices. Traders had hoped for a rate cut, which has not occurred since March 2020. A future rate cut could signal bullish trends for both stocks and cryptocurrencies, potentially uplifting markets for the remainder of 2024. Despite the initial selloff, markets are expected to stabilize unless another significant event impacts the crypto sector.
Bullish Outlook, Bearish Sentiment
Aggressive bull accumulation and increased negative sentiment among investors may set the stage for a substantial market rebound. Despite the anticipation surrounding the FOMC meeting, the impact on cryptocurrencies was limited, as the rate pause had already been factored into prices.
Previous Fed decisions have shown minimal impact on Bitcoin prices.
Historically, FOMC actions affect all asset classes. In 2020 and 2021, Bitcoin and other altcoins soared as the Fed slashed rates to zero, only to reverse in 2022 when rates began to rise. Investors have since moved trillions into low-risk assets, with money market funds amassing over $6.1 trillion, benefiting from an average return of 5%.
Key Indicators to Watch
Bitcoin’s immediate resistance is noted at $66,852, with support at $65,000. The Relative Strength Index (RSI) signals oversold conditions, suggesting possible further declines if the price falls below $65,900.
Investors are now closely watching the FOMC meeting for clues about inflation and economic growth, which could influence Bitcoin’s next move. The interplay between Federal Reserve decisions and market reactions will be crucial in determining the future trajectory of both cryptocurrencies and traditional assets.
Also Read: Why is Bitcoin Price Down Today? Is a Major Correction Imminent?
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