As a seasoned researcher with over two decades of experience under my belt, I have seen more than a few market fluctuations and shifts that have left even the most astute investors scratching their heads. The recent news about US Federal Reserve officials discussing potential rate cuts starting in September has certainly piqued my interest, as it could potentially have far-reaching implications for both traditional markets and cryptocurrencies like Bitcoin.
As a researcher, I’m sharing my observations on recent statements made by the US Federal Reserve (Fed) officials. They appear open to a potential interest rate cut in September, marking a shift from previous months of rate hikes and maintaining a stable rate status quo. Remarkably, Minneapolis Fed President Neel Kashkari has confirmed that it’s appropriate to discuss such a possibility for September. Given these dovish comments from various Fed officials, due to signs of cooling inflation and a slowing labor market, I find myself pondering whether this could potentially lead to a Bitcoin price rally. However, it’s essential to remember that the relationship between central bank policies and cryptocurrency markets can be complex, so a direct cause-and-effect correlation might not always materialize.
Fed Officials Open On Fed Rate Cuts
On Monday, Minneapolis Fed President Neel Kashkari expressed to the Wall Street Journal that now is an appropriate moment to explore the possibility of interest rate reductions by the U.S. Federal Reserve. He endorses the notion of initiating these cuts as early as September.
“Since the risk situation has changed, it’s reasonable to discuss the possibility of reducing interest rates in September,” Kashkari explained in an interview with the Journal.
Kashkari’s comments come after St. Louis Fed President Alberto Musalem, Atlanta Fed President Raphael Bostic, and Federal Reserve Bank of San Francisco President Mary Daly’s dovish stance. They also agree on potential rate cuts starting in September.
Yet, he doesn’t find it necessary to decrease interest rates by more than 0.25 percentage points within a month because job losses stayed minimal and unemployment benefit claims didn’t indicate a significant drop.
The CME Fed Watch tool indicates an estimated 75.5% chance of a 0.25 percentage point interest rate decrease in September. They anticipate a total of approximately 0.75 percentage point reduction in interest rates by the end of the year.
According to a survey conducted by Reuters, economists predict that the Federal Reserve will increase interest rates by a quarter point during each of the final three meetings in 2024, and there’s a low probability of a recession happening in the U.S.
Bitcoin Options Target $100K By Year-End
At the moment, Bitcoin’s value is being exchanged below $60,000 – a decrease of approximately 20% from its record high. This price drop has been noted by MicroStrategy’s executive chairman, Michael Saylor, who considers it as a 20% discount on Bitcoin, thereby creating a positive buzz within the crypto enthusiasts.
According to Deribit data, traders are aiming for Bitcoin’s price to reach $100k by December through options trades. On August 30th, around $3.38 billion worth of these options will expire. The ‘max pain point’ is at $61,000, suggesting that Bitcoin might recover and reach this level before the end of August itself.
As a crypto investor, I anticipate that the U.S. Federal Reserve’s rate cuts could trigger some initial turbulence across both the stock and cryptocurrency markets. This volatility might result in a significant rearrangement of traders’ positions, much like what happens during other significant market events.
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2024-08-19 18:26