Bitcoin soared in mid-September when the US Federal Reserve announced the first interest rate cut in over four years. As such, many expected this to be the case after Powell’s speech on Monday, but they have been proven wrong.
The question arises of why BTC failed to produce impressive gains despite the Fed Chair’s hint at more upcoming rate cuts this year.
Why No Pump, BTC?
It was the end of August this year when Jerome Powell, the Chairman of the US central bank, said it was time for the Fed to follow the example set by the ECB, the Bank of England, the Bank of Canda, and others, and lower the local interest rates. Bitcoin, considered a riskier asset that is heavily influenced by macroeconomic events, surged immediately.
However, it dropped hard in the following weeks from over $65,000 to under $53,000 (September 7) in anticipation of the Fed’s actual rate cut. This occurred on September 18, and the first reduction in the rates of 50 basis points since 2020 pushed BTC’s price up in the following ten days or so from $59,000 to $66,500 last weekend.
Nevertheless, the cryptocurrency has lost some traction since then, and all eyes turned on Powell again yesterday when he was expected to address the Fed’s monetary policy pivot in Nashville, Tennessee.
In his speech, the Fed Chair suggested that the central bank will likely slash the rates two more times this year by 25 basis points each. This would mean a total reduction of 1% within the span of just a few months.
But BTC Dropped?
While this sounds like promising news for riskier assets like BTC, the cryptocurrency couldn’t mimic its previous performance and failed to produce any substantial gains. Just the opposite, it’s down by over 2% over the past 24 hours and now trades at a multi-day low of $62,500 after it was rejected at $64,000 earlier today.
Bitcoin/Price/Chart 01.10.2024. Source: TradingViewRecall that a few industry experts warned about potential price calamities for BTC after the Fed’s rate reduction. First, it was Arthur Hayes who said the rate cut could ‘cripple’ the crypto market, especially in the short term.
The research department at Bitfinex went further, indicating that BTC’s price could tumble to $45,000 after the Fed’s pivot.