Minority Mindset

Smart investments

Crypto News

Bitcoin Gains 5% to $61K Ahead of Fed, but Order Books Suggest Rally Could Be Capped

Sep 16, 2024
    Bitcoin led the crypto rally, hitting its highest price in September, while ETH, SOL, XRP, ADA and AVAX advanced 2%-4%.Significant BTC sell orders between $61,000 and $62,500 may cap further rally, Binance order book shows.”A lot of the focus will be around positioning into tomorrow’s highly anticipated Fed event risk,” LMAX Group’s Joel Kruger said.
As a seasoned crypto investor with over a decade of market experience under my belt, I find myself cautiously optimistic about the current state of the digital asset market. The recent surge in Bitcoin to its highest price since September is indeed encouraging, but I remain skeptical due to the significant sell orders between $61,000 and $62,500 on Binance’s order book.On Tuesday morning in the U.S., Bitcoin (BTC) reached a peak of $61,000, as cryptocurrencies gained momentum in anticipation of tomorrow’s Federal Reserve meeting. This meeting is significant because it’s widely predicted that the central bank will lower its key interest rate for the first time in four years.

Bitcoin, the most significant and long-standing cryptocurrency, propelled the digital assets market upward. It reached its peak price in three weeks at $61,330, but later relinquished some of those gains. Currently, it’s trading just under $61,000, representing an increase of over 5% within the last 24 hours.

As a crypto investor, I witnessed a significant jump in the broader crypto market, as the CoinDesk 20 Index surged by 3%, reaching 1,880. However, while Bitcoin (BTC) continued its strong performance with gains ranging from 2% to 4%, other altcoins such as Ether (ETH), Solana (SOL), Ripple’s XRP (XRP), Cardano’s ADA (ADA), and Avalanche’s AVAX (AVAX) showed more modest increases, underperforming BTC in their respective growth.

Regardless of the recent surge, Bitcoin has been trading within a narrow band and appears not to burst its boundaries before the upcoming FOMC meeting on Wednesday.

On Binance, the leading cryptocurrency exchange by volume, data from the BTC-USDT order book indicates a substantial number of sell orders lying between $61,000 and $62,500. This could potentially hinder any immediate price rise.
Bitcoin Gains 5% to $61K Ahead of Fed, but Order Books Suggest Rally Could Be Capped

Moving forward, there’s expected to be significant attention on aligning strategies for the forthcoming Federal Reserve event, as pointed out by Joel Kruger, a market strategist at LMAX Group, in his market update from Tuesday.

There remains some ambiguity as to whether the Federal Reserve will go for a smaller 0.25 percentage point reduction or a bigger 0.50 percentage point adjustment. As we approach the central bank’s announcement, investors have given a 63% likelihood to the larger cut, based on data from the CME FedWatch Tool.

As a researcher, I am eagerly anticipating the potential for a larger, more accommodating interest rate reduction by the Federal Reserve during their meeting tomorrow. This anticipated cut has caused yield differentials to shift unfavorably for the U.S. dollar according to Kruger’s analysis.

As a crypto investor, I’ve observed that the situation isn’t always as simple as it seems. A significant reduction in interest rates might trigger a panic among risk asset holders due to fears of increased economic instability. This is something K33 Research analysts have pointed out, comparing such cuts to those during the 2001 and 2007 recessions, which often indicated heightened risks of a U.S. recession.

Bitcoin Gains 5% to $61K Ahead of Fed, but Order Books Suggest Rally Could Be Capped

According to K33 analysts, if inflation decreases significantly and joblessness increases, the Federal Reserve might decide to make quick reductions in interest rates to achieve a neutral level.

Read More

2024-09-17 20:14