Bitcoin Maintains $60K Level Amid Traders’ Caution Over Potential Sell-Off Due to 50 Basis Point Fed Rate Cut
Bitcoin is currently trading above $60,000, with traders eagerly anticipating updates from the Federal Open Market Committee (FOMC). The CoinDesk 20 (CD20), which measures market performance, has seen a 1.1% increase.
BTC maintained its position above $60,000 early on Wednesday, following a brief dip below that threshold in the late hours of the U.S. trading session. Market participants worldwide are looking towards the FOMC meeting, where it is widely expected that Chair Jerome Powell will announce rate adjustments.
At the time of reporting, BTC was trading just above $60,300, marking a nearly 4% uptick over the past 24 hours, extending its weekly gains to over 7%. The movement of major tokens varied, with ether (ETH), BNB Chain’s BNB, and dogecoin (DOGE) experiencing minor increases, while xrp (XRP), Cardano’s ADA, and Toncoin (TON) showed slight declines.
The broad-based CoinDesk 20 (CD20), which tracks the largest tokens, has shown a 1.1% rise. The FOMC is scheduled to release its statement and interest rate decision later in the day, at 2 p.m. Eastern Time. Historically, a shift towards lower borrowing costs has boosted bullish sentiment among traders, as easy access to funds stimulates growth in riskier sectors.
According to Fed funds data, traders are currently pricing in a 67% likelihood of a rate cut that would bring rates within the range of 4.5% to 5%, down from the current two-decade high of 5.25% to 5.5%. A more significant rate reduction would result in a half-percentage point drop, deviating from the usual quarter-point cut.
Traders on Polymarket are split between the possibility of a 100 basis points (bps) and 125 bps cut, with both scenarios having a 31% chance of materializing. However, concerns have been raised that a 50 bps cut could trigger a market sell-off, signaling economic distress.
Alice Liu, research lead at CoinMarketCap, highlighted the potential market reactions to different rate cut sizes, emphasizing that a 25 bps cut could boost markets, while a 50 bps cut might indicate recession fears, leading to a more profound correction in risk assets.
Liu also mentioned that if the rate cut is perceived as a response to weakening economic conditions, it could raise apprehensions about future earnings growth, potentially resulting in a short-term pullback in BTC and other crypto assets. Looking ahead, Q4 could bring about a shift towards more stability post the U.S. elections.
At the Token 2049 conference in Singapore, SkyBridge Capital founder Anthony Scaramucci predicted that bitcoin could reach a record high in response to rate cuts and clearer regulations in the U.S. regarding crypto. Scaramucci proposed the possibility of a 150 bps rate cut at the next Fed meeting.
In other crypto news, Sui has surged over 7% due to positive market sentiment following the launch of USDC on the platform and Circle’s introduction of its Cross-Chain Transfer Protocol (CCTP), enabling cross-chain flows on Sui. Additionally, Circle has partnered with Polymarket at Token 2049 to enhance the integration of Circle’s infrastructure into the prediction market platform, including CCTP.
