invezz.com
25 September 2024 07:49, UTC
Bitcoin continued its upward trajectory late Tuesday, surpassing $64,000 as traders anticipate further monetary easing measures from central banks around the world.
The growing expectation of a second consecutive 50 basis point interest rate cut by the US Federal Reserve in November has provided a strong tailwind for the cryptocurrency market.
At press time, Bitcoin was trading at $64,241, a nearly 2% increase over the past 24 hours, marking its highest level in over a month.
Source: CoinMarketcap
The broader backdrop of global monetary easing, including China’s latest move to lower interest rates to combat an economic slowdown, has fueled optimism across financial markets.
While China’s Shanghai Composite Index surged by more than 4%, the positive impact on Bitcoin prices was modest and short-lived.
After briefly dipping below $63,000 in the morning due to a sharp drop in US consumer confidence, Bitcoin regained momentum throughout the day as traders priced in the likelihood of more accommodative monetary policy.
The Conference Board’s Consumer Confidence Index fell sharply in September, dropping to 98.7 from 105.6 in August, the steepest decline since 2021.
“Consumers’ assessments of current business conditions turned negative, and views on the labor market softened,” said Dana Peterson of the Conference Board.
“There was also increased pessimism about future labor market conditions and business prospects.”
Following the release of the consumer confidence data, expectations for a 50 basis point rate cut by the Federal Reserve at its November meeting jumped to 61%, up from 50% the previous day, according to CME’s FedWatch Tool.
The possibility of further easing measures, along with a notable increase in the US M2 money supply in August, helped drive Bitcoin’s price higher.
Gold, another asset seen as a hedge against inflation and economic uncertainty, also benefited from the news, rising 1.4% to a record high of $2,690 per ounce.
Despite Bitcoin’s recent gains, it remains just below the levels it reached a few weeks ago.
While the cryptocurrency has risen more than 10% over the past week, some analysts remain cautious about declaring a full breakout.
“It’s psychologically difficult to shift from a mindset of trimming positions during price spikes to letting your winners run,” noted prominent crypto analyst Will Clemente.
Very psychologically difficult to flip from looking to trim on pops during chop to letting your winners ride. A confirmed change in market structure above $65k on BTC is the threshold for risk on and switching this bias IMO.
“In my view, a confirmed change in market structure above $65,000 would be the key threshold for a more bullish outlook.”
As global monetary policies continue to evolve, Bitcoin’s performance will likely remain tied to expectations of further easing, with investors closely watching central bank actions for further clues on the cryptocurrency’s future trajectory.
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