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.
It was a relatively big drop before the most awaited speech of the US Federal Reserve Chairman Jerome Powell at Nashville, Tennessee.
Powell: No Need for Labor Market Cooling for 2% Inflation
Federal Reserve Chair Jerome Powell said on Monday that the Fed believes further cooling in labor market conditions is not needed to reach the 2% inflation target. He added “many indicators show the labor market is solid,” it has shown signs of cooling over the past year.
Powell said “disinflation has been broad-based” and that the latest figures suggest an elusive return to its 2% goal now may be sustainable. He further said general economic conditions are appropriate for additional disinflation, adding the job market “is now roughly in balance” with longer-run inflation expectations “well anchored.”
He added that if the US economy continues to evolve and stay strong as it is “broadly as expected,” the Fed’s policy would move toward a “more neutral stance.” That could probably again make Bitcoin price go up.
Powell’s comments that disinflation is broad-based and that the economy could stabilize would make investors more confident in Bitcoin price, as a more neutral Fed increases demand for alternative assets on the back of a good outlook for inflation.
Bitcoin Soars Amid Fed Pivot and China Stimulus
The latest rally of Bitcoin price began two weeks ago after the US Federal Reserve made an unexpected policy pivot, by cutting interest rates by 50 basis points-the first cut since the beginning of the Covid pandemic. This was definitely larger-than-expected cut since projection was for only 25 basis points.
However, a more immediate catalyst for last week’s surge in both Bitcoin price and global markets came courtesy of China. Reports indicated that the Chinese authorities were contemplating an injection of up to 1 trillion yuan into the country’s largest state-owned banks in an attempt to stabilize the economy, which is presently struggling.
However, the Shanghai Composite index of China leaped, adding over 8%, and positioned for the best week since 2011. The European markets added around 1%. The US stocks were higher but beneath their earlier highs. This wave of global economic developments taken together is a booster of confidence in traditional and crypto markets.
Also, the Hang Seng Index at the Hong Kong Stock Exchange has similarly been on an impressive run since the December 17 session, repeatedly posting positive sessions to include today’s.
In particular, the past week has been the best performance for Chinese stock markets since 2008.
So far, the Hang Seng Index is up 18% from its September 16 closing and has surged about 15% since the end of August, reflecting growing investor confidence and favorable market conditions in the region.
Bitcoin Price Surges, Gold Plunges as China Takes Action
The other major casualty of the latest developments was the rout in precious metals, with gold tumbling from a record high of more than $2,700 per ounce and silver falling from its strongest in 12 years.
Interest in US-based spot Bitcoin ETFs has reached a fever pitch as the price of Bitcoin rises anew after the recent dwindling momentum. For instance, BlackRock’s iShares Bitcoin Trust, IBIT, recorded huge inflows recently, pulling in almost $185 million in fresh investments, Farside Investors said.
Let’s also not forget that recently China’s central bank has made a big move to shore up confidence in the world’s second-largest economy by cutting the interest rate on one-year policy loans by the widest margin on record. This significant interest rate cut could bolster investor confidence and liquidity in global markets, potentially driving increased demand and bolster Bitcoin price as an alternative asset amidst economic uncertainty.
The People’s Bank of China earlier announced that it would cut the rate of the medium-term lending facility from 2.3% to 2%, a 30-basis-point cut, the deepest since the bank introduced the monetary instrument to guide market interest rates in 2016. Aggressively, this comprehensive program is taken to inject vitality into the economy and improve its growth come what may.
Markets are on high alert, and the crypto market is no exception, in expectation of the coming release of job data in the United States. The report would be released on October 4 by the Department of Labor and would include the nonfarm payroll figures, unemployment rate, and the statistics of hourly wages for September. These indications are important in the assessment of the health of the labour market, which the US Federal Reserve watches closely when setting monetary policy.
All this might lead to increased volatility in the crypto market, with traders speculating the outcome could have an effect on the Bitcoin price, given possible changes in Federal Reserve monetary policy.
“Uptober” and Rate Cut Hopes Fuel Bitcoin Bullishness
Wall Street economists expect nonfarm payrolls to rise 144,000, higher than 142,000 seen last month, while the jobless rate is seen unchanged at 4.2%. These assume greater significance in view of last week’s data showing US PCE inflation moderated to 2.2%. This has generated expectations of a more dovish Fed in the remaining meetings, thus helping decide the trend in the market.
Historical data points to October being quite a friendly month to Bitcoin price and prices of other major cryptocurrencies. This feeling is then enhanced by US elections scheduled to have usually brought more volatility and opportunities to financial markets.
Be it as it may, recent cooler US PCE inflation figures have revived speculation of a potential 50 basis point rate cut in November, according to the CME FedWatch Tool. That could be a continuing policy that might help keep the crypto market bullish. It’s not just an “Uptober” that analysts are expecting but they are also foreseeing a strong Q4 rally, which means digital assets might see more action during the remaining months.
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