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On Wednesday, the Federal Reserve (Fed) declared a rate cut of 25 basis points from the previous rate of 4.25%, aligning with market expectations. While this positive development was eagerly anticipated by leading experts as a key catalyst for the year ahead, cryptocurrencies Bitcoin (BTC), XRP, and Ethereum (ETH) experienced a market downturn following the announcement.
Fed Chair Cautions on Future Rate Cuts
The selloff deepened after Fed Chairman Jerome Powell mentioned during his press conference that another interest-rate cut in December “is not a foregone conclusion.” This unpredictability has heightened market volatility, as both cryptocurrencies and equities have surged this year in expectation of lower interest rates.
If the Fed refrains from further rate cuts in December, it could result in a rebound for the dollar, which would be unfavorable for Bitcoin bulls.
Analyst Manuel Villegas from Julius Baer observed that options-derived implied movements for US equity indices indicate potential significant shifts regarding upcoming macroeconomic reports. He advised crypto investors to brace for possible volatility.
Meanwhile, market analyst Timothy Peterson shared additional insights on social media platform X (formerly Twitter), forecasting that Bitcoin’s price could increase by up to 12% in the coming week, suggesting that the leading cryptocurrency might approach $123,000.
Analyst Predicts Positive Trajectory for Bitcoin
In his analysis, Peterson highlighted Bitcoin’s performance in relation to Federal Reserve Federal Open Market Committee (FOMC) meetings, noting that since 2023, Bitcoin’s average movement following such meetings has been approximately 1.5 times its performance from the prior week.
Given that Bitcoin saw a 4% gain in the week preceding the Fed’s decision, Peterson predicts a subsequent increase of around 7%, with a potential range of 0-15%.
The FOMC, responsible for setting US interest rates and directing monetary policy, typically observes cautious trading in the markets ahead of meetings, followed by reactions once the uncertainty is lifted. The expert concludes that despite rising uncertainty, Bitcoin and the broader market could experience another upward movement toward record highs.
Featured image from DALL-E, chart from TradingView.com
