However, November will be a crucial month for Bitcoin enthusiasts worldwide, as recent prominent polls have revealed that the Federal Reserve is expected to introduce once again an economic stimulus of a .25% interest cut — taking it to 4.5% from 4.75%.
As per leading economists, the move by the Federal Reserve is an appropriate reaction to the gradually lowering inflation and slowed US job market. However, it is largely expected to be only a 25 basis point interest cut compared to the previously believed 50 bps, as governmental reports have revealed that the US inflation has been reduced near the central bank’s aim of 2%. The FOMC meeting where the rate cut is to be announced will take place on November 6-7, beginning only 24 hours after the much anticipated US Presidential Election and as a combined force — the impact of this could shape Bitcoin’s future.
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Top Fed officials have maintained that the timing and measures of the rate cut will largely depend on new economic data sets focusing on jobs data, the final of which is expected to be submitted to the Federal Reserve on November 1. While the US central bank is generally undisturbed in marginal cooling of the jobs market periodically, however, coupled with the Presidential election looming around, larger rate cuts may be on the cards that will not only act as a critical enabler to the economy but also the larger crypto ecosystem, including Bitcoin.Market reaction to September’s rate cuts
When the Federal Reserve announced a reduction of 50 basis points to its benchmark interest rates in September, Bitcoin subsequently adopted an upward movement as it breached the $60,000 level in a 2% move. This upward momentum was a result of the lowered interest rates that enhanced the overall demand for new-age, riskier assets, especially after months of price uncertainty that engulfed Bitcoin following the halving event earlier this year. As the crypto market reacted favourably, the bullish momentum continued as whales, retail, institutionalised and governmental participation increased significantly.
Furthermore, the rate cut in September helped the crypto market to resume and sustain its long-awaited upward movement. As the central bank reduced interest rates to make borrowing cheaper, it soon aligned investors across levels, leading to growing participation in the market. The subsequent directional sentiment helped all cryptocurrencies to make gains, particularly Bitcoin, as it was perceived as a favourable move to make profits. This strategy helped to supplement Bitcoin’s price dynamics, reducing volatility and supporting it to make long-term inroads ahead of November.What can be expected from Bitcoin in November?
The crypto market is often unpredictable, but as an investment strategy, it’s too early to say anything definitively. The FOMC meeting amidst lowered inflation and cooling job markets, along with the US Presidential Election and several global developments will play a key part in shaping Bitcoin’s short and long-term future. At the time of writing this, Bitcoin was trading around $68,000-level, with a positive sentiment that may drive the price further upward towards the all-time high levels. Few oscillators also suggest that Bitcoin price dynamics, if supported through rate cuts and the US Presidential Election, may directly translate into making new record high levels and significantly enhanced regulatory clarity over the crypto ecosystem. However, Bitcoin’s price and volume dynamics will certainly be subject to considerable pressure from surrounding developments, economic or otherwise.The FOMC Meeting will begin on November 6, with a definitive rate cut statement expected on November 7 at 2 pm ET by Chair Jerome Powell. Some positive pressure may be witnessed in the market following the statement, however, it will take some time for the larger investor community to understand and align their investment goals with whatever decision the meeting brings. Long-term futures will only be decided after the global investor community aligns with the Federal Reserve’s decision, which is expected to be a 25 basis point cut on the benchmark interest rates. However, any decision will depend on the several reports the FOMC committee reviews before the meeting, and investors should tread carefully till then.
(Attributed to Roshan Aslam, Co- founder & CEO of GoSats)
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)