Key Points
- The Federal Reserve’s potential rate cut could stimulate Bitcoin and altcoin prices.
- Bitcoin’s price may be influenced by factors such as institutional interest and pro-crypto policies.
The price of Bitcoin is under scrutiny as the financial market anticipates a possible rate cut by the Federal Reserve. This move could trigger a new wave of momentum.
The CME FedWatch Tool has shown a 74.5% likelihood of a 0.25% rate cut by the Federal Reserve in its upcoming meeting on December 18. This follows a 50 bps rate cut in September and a 25 bps cut last month.
Potential Impact of the Rate Cut
If this cut occurs, it could bring the federal fund’s target rate down to between 4.25% and 4.5%. This cut is generally seen as a dovish signal and could potentially boost the price of Bitcoin and other altcoins.
The expected shift from the Fed comes after months of inflation data indicating price stability. Federal Reserve Governor Christopher Waller recently expressed support for the cut, referring to downward inflation trends.
Federal Reserve officials, including Raphael Bostic, have also hinted at the possibility of a rate cut. Market expectations for such a cut have been steadily increasing in recent weeks.
Bitcoin’s Current Status
Meanwhile, the price of Bitcoin (BTC) experienced a significant uptrend in November, reaching a resistance of $99,655 on its way to $100,000 before a pullback occurred due to profit-taking trades from long-term holders.
At the time of writing, BTC is trading at $96,812, up 1.52% in the last 24 hours. The price has been consolidating between $93,000 and $96,000, indicating that the market is awaiting a major catalyst to drive prices higher.
Maksym Sakharov, co-founder of WeFi, suggests that a dovish move from the Fed could provide the necessary momentum. He explains that rate cuts lower borrowing costs and increase liquidity, conditions that have historically benefited Bitcoin due to its appeal as an inflation hedge.
Sakharov notes that increased liquidity often leads to more fiat in circulation, which can drive inflation fears and lead investors to seek stable alternatives like Bitcoin.
Furthermore, Sakharov emphasizes that Bitcoin’s price movements are influenced by a combination of factors, including institutional interest. He suggests that the limited supply created by halving, along with increased accumulation, could push Bitcoin’s price above $100,000.
Sakharov also mentions the optimism surrounding pro-crypto policies from U.S. President-elect Donald Trump, which could boost market momentum.
As the Federal Reserve’s meeting on December 17 and 18 draws closer, market participants are also keeping an eye on other economic indicators that could influence price movements.
Upcoming employment data and holiday sales trends will provide further information for the central bank’s decision. However, any unexpected signs of persistent inflation could temper the Fed’s dovish pivot and dampen Bitcoin’s bullish outlook.
Please note: This article is for educational purposes only and does not constitute investment advice.
