After the announcement of a rate cut, Bitcoin surpassed the $62,000 mark. Fed Chair Jerome Powell announced that the US central bank would cut interest rates for the first time in four years. Market experts believe this news could lead to a new surge in Bitcoin's value.
0.5% Rate Cut
Although a 25 basis point cut was expected, the 0.5% cut reflects a strategy to relax monetary policy. Powell announced that the US central bank would cut interest rates by 0.5%, bringing them to a range between 4.75% and 5%. Bitcoin surpassing its previous $73,000 record is likely to drive the entire $2.2 trillion crypto industry. However, the upcoming US elections create uncertainty that could jeopardize the potential rally.
Crypto Market Rally
The crypto market rose by 2% to $2.2 trillion due to the much-anticipated announcement. Ether jumped over 5% to $2,435 in the past 24 hours, while SOL surged over 6% to $138. Reduced interest rates and cheaper borrowings could prompt investors to buy high-risk assets like stocks and cryptocurrencies. As the broader crypto market rose with Bitcoin, it also triggered substantial liquidations. Crypto derivatives traders saw $204.3 million worth of contracts forced to liquidate in the past 24 hours, of which $130.5 million were short positions, while $73.8 million were longs.
Potential Risk Factors
Several factors could overturn the potential rally even before it gains momentum. The upcoming US elections are a major factor. According to Bernstein analysts, a Trump victory could drive Bitcoin to as high as $90,000 this year, while a loss could drop the cryptocurrency to as low as $30,000. Greg Magadini, director of derivatives at Amberdata, stated, "While elections may create regulatory headwinds, monetary policy is providing tailwinds, making Bitcoin the most likely winner."
The critical $60,000 level plays an important role in the current pricing dynamics of Bitcoin. According to Pi42 CEO Avinash Shekhar, a clear break above $62,000 is needed to strengthen bullish sentiment, while a drop below $60,000 could extend selling pressure.
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