Amid anticipation of critical Federal Reserve decisions, analysts share their predictions about the cryptocurrency market.
Analysts' Predictions for Cryptocurrencies
Analyst DaanCrypto points out that Bitcoin is experiencing sideways movement amid rising stock and gold markets. He warns investors that this monotonous period, although prolonged, will eventually come to an end. Historically, Bitcoin often shows a sharp rise after extended lateral trends.
Analyst Phoenix expects Solana (SOL) to surpass $246 due to positive reserve news and optimistic market sentiment. Meanwhile, analyst Poppe maintains a hopeful outlook for Ethereum (ETH) and altcoins while expressing concern over the potential for significant corrections.
Current Market Scenario
Monday was favorable for Wall Street, and the upcoming rate cut on Wednesday is viewed as almost certain. It is expected that a sequence of rate cuts will continue into next year. The rise of U.S. stocks to $14 trillion is not surprising given the preparation for the first cut since Donald Trump's presidency.
The S&P 500 hit 6,600 points, with Tesla seeing a 3.6% gain after Elon Musk's $1 billion stock purchase. Alphabet surpassed $3 trillion, and Trump is set to meet Xi on Friday. Meanwhile, Treasury yields are rising, nearing twelve-month lows for two-year bonds, while the dollar weakens.
Impact of Rate Cuts on Bitcoin
A look at Bitcoin's behavior during past rate cuts shows that the 2019 cuts led to limited BTC gains due to pre-established expectations. In contrast, the emergency cuts of 2020, driven by the pandemic, initially devalued BTC below $4,000 before the rapid monetary expansion fueled a surge to $28,000.
Today's market is significantly larger than in 2019-2020 and presents a competitive environment with traditional investment channels. Thus, the impact of a 25 basis point cut on BTC may be negligible. However, a strong dovish stance could trigger a swift recovery. If the Fed emphasizes the 2% inflation target and fosters recovery sentiment, a downturn may loom.
Easing monetary policy and abundant liquidity are essential for risk markets. The decisions made by the Fed in the upcoming meeting will significantly impact Bitcoin in the medium and long term.
