Here’s What to Do Now as Bitcoin Price Back Above $64K Again?

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As a seasoned crypto investor with over a decade of market experience under my belt, I must admit that navigating this dynamic and unpredictable landscape can be both exhilarating and nerve-wracking. The recent Bitcoin price fluctuations, while causing some short-term turbulence, are part and parcel of the rollercoaster ride that is cryptocurrency investment.

Bitcoin price shed close to $1,000 during the last hour alone, even though sticking above the $64,000 price mark so the correction in the cryptocurrency market is probably just short-term.

Prior to Jerome Powell’s highly anticipated address as the U.S. Federal Reserve Chairman, there was a substantial decrease in market values.

Powell: No Need for Labor Market Cooling for 2% Inflation

According to Federal Reserve Chair Jerome Powell, there’s no need for additional slowdown in the job market to achieve the 2% inflation goal. He pointed out that several signs indicate the job market is robust, although it has exhibited some signs of cooling down over the last year.

Powell stated that “disinflation has been widespread” and recent data indicates a possible lasting achievement of their 2% target. He continued by saying that overall economic circumstances could support more disinflation, noting that the job market is currently balanced, and long-term inflation expectations are firmly established.

If the U.S. economy maintains its current trajectory, aligning with general expectations, the Federal Reserve’s monetary policy may shift towards a “less interventionist posture.” This situation could potentially cause another Bitcoin price increase.

Investor confidence in Bitcoin could grow due to Powell’s remarks suggesting that disinflation is widespread and the economy may find stability. This is because a less interventionist Federal Reserve can lead to an increase in demand for non-traditional assets like Bitcoin, given positive expectations about future inflation trends.

Bitcoin Soars Amid Fed Pivot and China Stimulus

Two weeks ago, Bitcoin’s price surge started following an unanticipated shift in the US Federal Reserve’s policy, which involved reducing interest rates by a significant 0.5%. This was more than double what experts had predicted, as they were expecting just a 0.25% cut.

Instead, the significant increase in Bitcoin’s price and global markets over the past week can be attributed directly to China. It was revealed that Chinese authorities were considering injecting as much as 1 trillion yuan into their largest state-owned banks to bolster the country’s economy, which is currently experiencing difficulty.

In contrast, China’s Shanghai Composite index surged by more than 8%, marking its strongest weekly performance since 2011. European markets grew by approximately 1%, while US stocks climbed higher but fell short of their initial peaks. Collectively, these global economic movements are fostering optimism in both traditional and cryptocurrency markets.

Moreover, just like the Hong Kong Stock Exchange, the Hang Seng Index has also experienced a remarkable surge since its last session on December 17th. In fact, it’s been consistently posting gains, with today being no exception. Notably, the past week has marked some of the strongest growth for Chinese stock markets since the year 2008.

To date, the Hang Seng Index has seen an increase of 18% since it closed on September 16, and a further rise of approximately 15% since late August. This upward trend suggests that investors are becoming more confident about the market and the region is experiencing beneficial economic conditions.

Bitcoin Price Surges, Gold Plunges as China Takes Action

In the recent turn of events, a significant decline occurred in the prices of precious metals. Gold plummeted from an unprecedented peak above $2,700 per ounce, while silver dropped from its highest point in twelve years.

The interest in Bitcoin Exchange-Traded Funds (ETFs) based in the U.S., particularly those dealing with spot Bitcoin, has reached unprecedented levels as the price of Bitcoin surges following a period of decreased momentum. For example, BlackRock’s iShares Bitcoin Trust (IBIT) has seen substantial inflows recently, attracting approximately $185 million in new investments, according to Farside Investors.

Additionally, it’s worth mentioning that China’s central bank has taken a substantial step to boost trust in the world’s second-largest economy by lowering the interest rate on one-year policy loans by the largest margin ever recorded. This large reduction in interest rates could stimulate investor confidence and market liquidity, possibly leading to higher demand for Bitcoin as an attractive investment option during economic instability.

Earlier today, the People’s Bank of China announced it would lower the rate for its medium-term lending facility from 2.3% to 2%. This represents a significant reduction of 0.3%, the largest decrease since this monetary tool was introduced in 2016 to influence market interest rates. In essence, they are implementing a bold plan to stimulate economic growth and vitality, no matter what challenges arise.

As a crypto investor, I’m keeping a keen eye on the markets, with the upcoming release of U.S. job data adding an extra layer of anticipation to the crypto scene. On October 4, the Department of Labor will unveil this report, which includes the nonfarm payroll numbers, unemployment rate, and hourly wage statistics for September. These figures are crucial in evaluating the state of the labor market, a key factor that the U.S. Federal Reserve scrutinizes when deciding monetary policy.

As an analyst, I’m observing that several factors could potentially escalate the volatility in the cryptocurrency market. Traders might start speculating based on these factors, which could influence the price of Bitcoin, considering the potential impact of any modifications in the Federal Reserve’s monetary policy.

“Uptober” and Rate Cut Hopes Fuel Bitcoin Bullishness

Economists on Wall Street forecast an increase of approximately 144,000 nonfarm jobs this month, which is slightly higher than the 142,000 added last month. Simultaneously, they anticipate that the unemployment rate will remain steady at 4.2%. This data takes on increased importance in light of recent figures indicating that US PCE inflation has eased to 2.2%. This trend suggests a more accommodative stance from the Fed during their upcoming meetings, which could influence market trends.

Historically, October has often been favorable for the pricing of Bitcoin and other significant cryptocurrencies. Additionally, the anticipation surrounding U.S. elections typically adds to market volatility and potential investment opportunities.

Despite the latest lower US PCE inflation figures, there’s renewed talk of a possible 50 basis point rate cut in November. As suggested by the CME FedWatch Tool, such a move could represent an ongoing policy that maintains a positive outlook for the crypto market. Analysts aren’t just anticipating a strong October (Uptober), but also predicting a robust Q4 rally, indicating increased activity in digital assets throughout the rest of the year.

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2024-09-30 22:24