Bitcoin (BTC) Price Stumbles Below $65,000 as Fed Holds Interest Rates, Indicates Possible September Cut

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Joel Frank

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Joel Frank

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Since graduating with a degree in economics from the University of Birmingham in 2018, Joel has worked as a financial market/cryptocurrency analyst. He firmly believes that emerging crypto technology...

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July 31, 2024 16:35 EDT

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The Bitcoin (BTC) price has stumbled below $65,000 in wake of the latest Fed policy decision, where the central bank held interest rates steady at 5.25-5.50% as expected, and Fed chair Jerome Powell indicated a potential rate cut coming as soon as September.

⚠️BREAKING:

*FED CHAIR POWELL: RATE CUT COULD BE ON THE TABLE AT THE SEPTEMBER MEETING

*POWELL: 'IT'S JUST A QUESTION OF SEEING MORE GOOD DATA'$SPY pic.twitter.com/l52T5diaA2

— Investing.com (@Investingcom) July 31, 2024

That a more than 2% drop on the day for Bitcoin, whose market cap was last around $1.276 trillion.

The tone of the Fed and Powell’s remarks suggested that a September rate cut isn’t a done deal yet. Rather, the data will need to continue to point in that direction (i.e. more inflation and labor market softening).

That perhaps left some market participants who had been looking for a more concrete indication that rate cuts are coming somewhat disappointed.

That could explain the downside in the Bitcoin price. That said, the reaction in traditional financial markets was dovish, suggesting growing confidence that rate cuts are coming.

As per CME data, money markets continue to imply a 100% chance of the Fed cutting interest rates by at least 25 bps.

Moreover, CME data shows the implied likelihood of a 50bps rate cut in September to 18.2% from 13.2% prior to the meeting.

US 2- and 10-year yields both hit their lowest levels since March, the former dipping under 4.30%, the latter approaching 4.0%.

The big-tech stock packed Nasdaq 100 index pumped an impressive more than 3.5%, meanwhile.

Can Macro Tailwinds Power a Bitcoin Price Rebound?

US yields have been in a downtrend since April. The Nasdaq 100, meanwhile, while correction-prone, has been trending higher all year.

With Fed rate cuts seemingly now right around the corner, these trends could persist.

The Bitcoin price tends to perform well in an environment of easing financial conditions (i.e. lower yields) and equity outperformance.

An improving macro backdrop could be setting the stage for a rebound in the weeks ahead.

But Bitcoin traders remain worried about a potential rise in near-term sell pressure following recent major wallet movements.

The US government moved $2 billion of Silk Road confiscated Bitcoin on Monday.

BREAKING:

The US. Government just moved $2B of Bitcoin to a new address:

bc1qsl993y04xnq4fyhmrt6cnmctgjjv9ukdvrk0cd pic.twitter.com/JQvjKIuRNn

— Arkham (@ArkhamIntel) July 29, 2024

That killed a promising rally to $70,000, with the Bitcoin price now down 7% from earlier weekly highs. Further Mt Gox repayments may also be weighing on the market.

UPDATE: MT. GOX MOVES $3.1B BTC

Last night Mt. Gox addresses moved 33.96K BTC ($2.25B) to addresses we believe are most likely BitGo:

bc1q26tsxc0ge7phvcr2kyczexqf5pcj8rk79cqk90h34c30dn9dskeq3gmw3f
bc1q48a5tjhdjtkfv8zv6tj68767h8lgep9dpx0emrkx0yhhmum7wscs95ft36

BitGo is the 5th… pic.twitter.com/XWNiZ2boAN

— Arkham (@ArkhamIntel) July 31, 2024

Bitcoin bears will be eyeing a retest of support in the $63,600 area. But price risks remain tilted to the upside once US government and Mt Gox sell pressure FUD eases.

As Fed rate cuts near and the macro backdrop improves, as post-halving miner selling eases and the prospect of a very pro-Bitcoin Donald Trump presidency nears, Bitcoin remains odds on to surge to fresh record highs this year.

With a test of $100,000 highly possible in 2024 or 2025, Bitcoin is a strong candidate for best crypto to invest in right now.