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Bitcoin continued its upward momentum on Monday, reaching a one-month high as traders reacted positively to the Federal Reserve’s recent interest rate cut. However, trading volumes were subdued due to a market holiday in Japan and the anticipation of more economic signals in the coming days.
Bitcoin rose 1.3% to $63,932.1 by 00:58 ET (04:58 GMT), breaking out of the $50,000 to $60,000 range that it had been in for most of the year. This marks a continuation of its gains from the previous week.
Fed’s Rate Cut and Impact on Bitcoin
Bitcoin led gains in the broader crypto market, bolstered by optimism over further interest rate reductions. Several Federal Reserve officials are expected to speak this week, with investors focusing on a speech by Chair Jerome Powell on Thursday. Additionally, the Personal Consumption Expenditures (PCE) price index—the Fed’s preferred measure of inflation—is set to be released on Friday, potentially influencing the central bank’s future rate decisions.
The Federal Reserve cut rates by 50 basis points last week, marking the beginning of an easing cycle. Analysts predict that this cycle could result in a reduction of at least 125 basis points this year. Such a trend is positive for Bitcoin, as lower interest rates increase liquidity that can be invested in speculative assets, including cryptocurrencies.
However, gains in Bitcoin were tempered by the Fed’s indication that rates may not decrease significantly in the medium to long term. The crypto market also faces uncertainty due to regulatory concerns, especially with the approaching 2024 U.S. election.
Apart from the Fed, attention is also focused on central bank meetings in Switzerland and Sweden, both of which are expected to result in interest rate cuts. Despite these developments, recent hawkish signals from the Bank of Japan (BOJ) have somewhat limited Bitcoin’s advance, although a potential leadership change in the Japanese government could lead to increased resistance to future interest rate hikes.
Altcoins Mixed Amid Bitcoin’s Rise
The broader cryptocurrency market presented a mixed picture. Ethereum (Ether), the world’s second-largest cryptocurrency, rose by 2.9% to $2,657.20. In contrast, Solana (SOL) and Ripple (XRP) fell by 0.9% and 0.5%, respectively, while Cardano (ADA) and Polygon (MATIC) saw marginal gains. Among meme tokens, Dogecoin (DOGE) registered a slight increase, rising by 0.3%.
As the week progresses, Bitcoin and other cryptocurrencies are expected to react to additional economic cues, particularly the upcoming data from the Federal Reserve and other central banks. While the recent rate cut has boosted Bitcoin’s price, market participants remain cautious about potential regulatory challenges and broader macroeconomic factors that could influence the crypto market’s trajectory in the coming months.
