Bitcoin's price rose by 5% to $61,000 during early trading hours in the U.S. on Tuesday, as the overall cryptocurrency market surged in anticipation of the Federal Reserve’s highly anticipated meeting.
Bitcoin Price Surge
On Tuesday, Bitcoin reached a three-week high of $61,330 before paring some of its gains and was trading just below $61,000 by midday. The asset is up more than 5% in the past 24 hours.
Impact of the Fed Meeting
The U.S. central bank is expected to announce its first benchmark interest rate cut in four years, fueling optimism in the digital asset space. While uncertainty looms over whether the Fed will cut rates by 25 basis points or 50 basis points, the CME FedWatch Tool shows a 63% chance of a more significant 50 basis point cut.
Potential Risks and Future Projections
Analysts at K33 Research warned that bigger cuts, while tempting, could signal rising recession risks, as seen in past downturns in 2001 and 2007. However, they noted that the situation could be different this time because inflation has eased in recent months, giving the Fed room to cut risk assets more quickly without causing panic. Despite the recent volatility, Bitcoin’s rally could be capped by higher resistance in order books. Market participants are eyeing a potential 125 basis point cut in the federal funds rate by the end of the year, but any unexpected moves by the Fed could send markets into turmoil.
In the coming days, the cryptocurrency market will be closely monitoring the Fed meeting and its possible decisions, which could impact the further price dynamics of digital assets.
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