Key Points
- Bitcoin [BTC] and US stocks fell during Monday’s trading session following Jerome Powell’s comments on Fed rate cuts.
- The $63K mark could be a crucial short-term support level for Bitcoin.
Bitcoin [BTC] and US stocks experienced a decrease during the trading session on Monday, 30th September. This drop was in response to comments made by Fed chair Jerome Powell concerning expectations for rate cuts.
Powell’s Remarks on Rate Cuts
During a conference held by the National Association for Business Economics in Nashville, Powell made no indication of favoring a faster or slower pace for interest rate reduction. He predicted two more interest rate cuts, each being 25 basis points (bps), before the year’s end.
Market Reactions
Prior to Powell’s remarks, the market had been expecting an aggressive 50 bps cut in November, mirroring the move seen in September. However, after Powell’s speech, interest rate traders priced higher odds of 25 bps at 61.8%. Conversely, the likelihood of a 0.50% cut fell to 38.2% from the 53% seen last Friday, 27th September.
This change in sentiment has set the tone for the new week, especially with the anticipation of crucial US labor updates. Notably, US demand for BTC dropped from last Friday’s positive reading to a negative on 1st November, according to the Coinbase Premium Index.
In comparison to the nearly $500 million daily inflows in US spot BTC ETFs last Friday, these products only netted $61.3 million on Monday, 30 September. However, the $63K mark could be a crucial short-term support level for Bitcoin.
At the time of writing, BTC was valued at $63.9K, with the market closely watching for crucial US labor updates. Another potential positive catalyst for Bitcoin could be the increasing signals towards an end to the Fed’s quantitative tightening (QT) as more institutions tap into the Fed’s Repo facility. This could lead to an injection of more Fed liquidity and a boost in risk assets.
However, rising geopolitical tension in the Middle East could also challenge Bitcoin’s October expectations and is worth keeping an eye on.