Bitcoin Hits New High Above $79,000, Market Sentiment Booming, Uncertainties Linger Over Fed Rate Cuts

Bitcoin Hits New High Above $79,000, Market Sentiment Booming, Uncertainties Linger Over Fed Rate CutsRecent data shows Bitcoin has surged past $79,000, setting a new all-time high, with gains exceeding 4% on the day. Coinglass data reveals over 130,000 traders liquidated their positions in the past 24 hours

Bitcoin Hits New High Above $79,000, Market Sentiment Booming, Uncertainties Linger Over Fed Rate Cuts

Recent data shows Bitcoin has surged past $79,000, setting a new all-time high, with gains exceeding 4% on the day. Coinglass data reveals over 130,000 traders liquidated their positions in the past 24 hours. Bitcoin has risen over 10% in the past five days, 40% in the last two months, and nearly 80% year-to-date. Dogecoin also saw a significant surge exceeding 13%.

This fervent market sentiment can be attributed to the upcoming US presidential election. Cryptocurrencies are considered part of the "Trump trade," with investors betting on Trump's victory, leading to a sharp rally across the cryptocurrency market since voting began. Elon Musk, a longtime supporter of Dogecoin, has stated that if Trump wins, he would establish the Department of Government Efficiency (D.O.G.E.). Musk has been a vocal supporter of Trump's campaign throughout the election cycle. Trump has previously expressed support for the development of cryptocurrencies. In July, at the Bitcoin 2024 conference, Trump announced that if he returns to the White House, he would designate Bitcoin as a US strategic reserve asset. He also pledged to fire SEC Chairman Gary Gensler on the first day of his presidency if elected.

On the other hand, the Fed delivered the expected 25 basis point rate cut this week, but some adjustments to the policy statement have fueled speculation about a possible pause in rate cuts in December. Fed Chair Powell stated that the overall economy is robust, with recent indicators pointing to solid expansion. Consumer spending continues to show resilience, and supply conditions are improving. Powell reiterated that US inflation is now closer to 2% and core inflation remains somewhat elevated. He asserted that the rate cut will help maintain the strength of the economy.

The CME FedWatch tool indicates a 64.6% probability of a 25 basis point rate cut in December and a 35.4% chance of maintaining rates. "Fed Whisperer" Nick Timiraos notes that Fed officials are now grappling with the question of whether the US election outcome will lead to meaningful changes in economic demand or inflation, necessitating a different policy path. Lindsay James, an analyst at Quilter Investors, stated in a report that the pace of future Fed rate cuts appears less certain than widely expected before the decision.

Currently, the market is shrouded in uncertainty about the trajectory of cryptocurrencies and Fed policy. Whether the frenzy in the crypto market will persist and if the Fed will halt rate cuts in December remain critical questions shaping the future of the markets. Investors should exercise caution, invest rationally, avoid blindly following trends, and manage their risks.

Disclaimer: This content and data are for informational purposes only and do not constitute investment advice. Please verify information before using it. Use at your own risk.