Bitcoin Plunges Over 60,000 Liquidated, Gold Hits New High as Fed Rate Cut Expectations Grow

Bitcoin Plunges Over 60,000 Liquidated, Gold Hits New High as Fed Rate Cut Expectations GrowOn September 16, the cryptocurrency market suffered a sharp decline, with Bitcoin falling over 2%, Ethereum down 4.62%, and Dogecoin dropping 3

Bitcoin Plunges Over 60,000 Liquidated, Gold Hits New High as Fed Rate Cut Expectations Grow

On September 16, the cryptocurrency market suffered a sharp decline, with Bitcoin falling over 2%, Ethereum down 4.62%, and Dogecoin dropping 3.76%. The total number of liquidations across the network reached 61,700, with a total liquidation value of $179 million. Meanwhile, international gold prices hit a new all-time high before retracing slightly. London spot gold reached a high of $2,589 per ounce during the session, while COMEX gold futures peaked at $2,617 per ounce. Industry analysts believe this recent surge in gold prices is linked to several key economic data releases from the United States. Furthermore, the expectation of a global shift towards loose monetary policy has provided further momentum for gold price gains.

Bitcoin Crash Triggers Liquidation Wave

On September 16, Bitcoin prices fluctuated downward over the past 24 hours, falling over 2% to $58,560.6 by the time of writing. Data from Coinglass shows that over the last 24 hours, 61,700 accounts were liquidated, with a total value of $179 million wiped out. Previously, the US July non-farm payrolls data came in significantly lower than expected, causing Bitcoin prices to decline over 14% to $57,000 in the week ending August 4, marking its largest weekly drop since the collapse of FTX exchange in 2022. On August 5, Bitcoin prices even dipped below $49,000.

This recent Bitcoin slump is closely tied to the upcoming interest rate decision from the Federal Reserve. As the US Federal Reserve prepares to announce its interest rate decision on September 18, market expectations for a 50-basis-point rate cut have increased. Currently, the market is nearly evenly split between a 25-basis-point and a 50-basis-point rate cut this week. Swap rates corresponding to Wednesday's Fed decision currently suggest a 50% probability of a 50-basis-point rate cut, a stark contrast to last week when such a move was almost entirely ruled out.

Gold Hits New High, Fueled by Rate Cut Expectations

International gold prices have reached new record highs before retracting somewhat. Wind data shows that as of press time, London spot gold is up 0.21%, hitting a high of $2,589 per ounce during the session. COMEX gold futures are down 0.13%, with a peak of $2,617 per ounce, both setting new all-time highs.

The consensus among industry experts is that this surge in gold prices is linked to the release of multiple key economic data points from the US this month. On September 11, the US Labor Department reported that the August CPI (Consumer Price Index) increased by 2.5% year-over-year, marking a fifth consecutive monthly decline and reaching a new low since February 2021. The report also came in below the expected 2.6%. The subsequent release of the PPI (Producer Price Index) also showed a continued decline and undershot expectations, rising 1.7% year-over-year, a significant drop from the previous reading of 2.2%. These data points indicate that inflation's constraints on the Fed's rate cut are gradually easing, and the market widely expects the Fed to lower rates next week.

Commerzbank Research noted that expectations for a Fed rate cut have intensified since late last week, and lower interest rates typically benefit gold. Additionally, the European Central Banks latest rate cut has further fueled bullish sentiment for gold. On September 12, the ECB announced a 25-basis-point rate cut, marking the second rate cut of the year for the ECB.

Market Diverges on Gold's Future Trajectory

Goldman Sachs stated in its latest September report that gold is poised to extend its record-breaking rally into 2025, maintaining its forecast that gold will reach its target price of $2,700 per ounce by early 2025. However, other analysts point out that in the near term, market sentiment will continue to fluctuate in line with economic data releases, coupled with the US election and geopolitical factors, potentially exacerbating gold price volatility.

Citigroup predicts that gold could reach $2,600 by the end of 2024 and $3,000 by mid-2025, citing factors such as US rate cut expectations and strong ETF demand.

Conclusion

The recent cryptocurrency market downturn has triggered a liquidation wave, with over 61,700 liquidations across the network. Meanwhile, international gold prices have hit new all-time highs, with the consensus being that the rise is tied to improved US economic data and growing expectations for a Fed rate cut. However, there are differing opinions on the future trajectory of gold prices, and near-term volatility is expected to increase.