In a surprising twist, Bitcoin, which took a sudden dip earlier this week, hitting $40,000, has defied expectations, bouncing back swiftly and surpassing the $43,000 mark by Wednesday, leaving investors pleasantly surprised.
The driving force behind this quick recovery in the crypto market is a strategic move by the U.S. Federal Reserve. They’ve decided to keep their interest rate between 5.25% and 5.50%, maintaining the current Fed funds rate range. They’ve also adjusted their prediction for the end of 2024, lowering it from 5.1% to a more optimistic 4.6%.
Read More About This: Crypto Markets Surge as FED Hints 2024 Rate Cuts
Confidence Surges!
The latest predictions from the Fed give us a peek into the future. They foresee a core inflation rate of 3.2% post-2023, down from the previous 3.7% estimate in the last three months. Simultaneously, the outlook for real GDP growth in 2024 has been adjusted downward to 1.4%, slightly lower than the initial estimate of 1.5%.
In a move that could reshape things for U.S.-based firms, a recent accounting rule change on December 13 might bring in a new wave of adoption for Bitcoin and other cryptocurrencies. This change allows companies holding crypto to report not only losses but also paper gains, potentially boosting confidence. Industry giants like MicroStrategy and Tesla might see Bitcoin as a strategic financial asset given this positive adjustment.
Adding to the excitement, Bitcoin’s difficulty saw a significant 0.96% reduction at block height 820,512—the first decrease in the past six adjustments. Currently standing at 67.31 trillion, this reduced difficulty will persist for the next 12 days until December 23, 2023. While this benefits miners by making the process of finding a block reward simpler, it hasn’t resulted in an immediate increase in the hashrate.
As excitement builds, the looming possibility of Spot Bitcoin ETF approval and the upcoming halving event, anticipated in April, adds further fuel to the crypto surge. The forthcoming halving event is expected to limit the supply of Bitcoin for potential investors, likely pushing prices higher as the market anticipates reduced availability.
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The twists and turns continue, keeping investors on the edge of their seats as Bitcoin charts an unpredictable yet fascinating course.
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