Bitcoin Rallies to $64,000 as Investors Await Fed Rate Decision

Bitcoin Rallies to $64,000 as Investors Await Fed Rate DecisionBitcoin (BTC) and the broader cryptocurrency market showed a bullish trend in early trading on Monday, while stocks and gold traded in the red, as traders reassessed their expectations for a November rate cut. The move reflects the market's sensitivity to the Federal Reserve's policy stance and the future direction of the economy

Bitcoin Rallies to $64,000 as Investors Await Fed Rate Decision

Bitcoin (BTC) and the broader cryptocurrency market showed a bullish trend in early trading on Monday, while stocks and gold traded in the red, as traders reassessed their expectations for a November rate cut. The move reflects the market's sensitivity to the Federal Reserve's policy stance and the future direction of the economy.

The CME FedWatch Tool currently shows an 84% probability of a 25 basis point rate cut at the next Federal Open Market Committee (FOMC) meeting. However, recent non-farm payrolls data showing strong performance in the US labor market has prompted investors to reassess the Fed's monetary policy course.

David Morrison, senior market analyst at TradeNation, said that amid the pullback, investors "responded to rising bond yields, with the 10-year Treasury yield rising above 4.0% for the first time since early August." He noted: "Major professional equities markets went on a wild ride over the weekend after the release of a stronger-than-expected jobs report and a small but counterintuitive decline in the unemployment rate." "This caused a significant reassessment of expectations for future Fed rate cuts."

The reassessment has been so significant that expectations that the Fed will hold rates steady at the upcoming FOMC meeting have now risen to 16%. "Investors are now betting on two 25 basis point rate cuts by year-end, via the CME's FedWatch tool, rather than the 75 basis points priced in before the payroll update," Morrison said. "As several senior Fed members have made clear, it is believed that inflation is now on a sustainable path back towards the 2% target. That means the FOMC can now focus on maximizing employment, the other side of its dual mandate."

He highlighted: "Earlier in the summer, there were signs that the labor market was quickly softening, leading many investors to believe that the Fed would be forced to cut rates aggressively to prevent a hard landing." "But last week's jobs data helped to somewhat offset those concerns, and this week everyone can start worrying about inflation and corporate earnings again."

Market watchers will now be closely watching the release of the minutes from last month's FOMC meeting on Wednesday for any clues on what the Fed may do next. "Then there are two key inflation updates: the CPI on Thursday and the PPI on Friday," Morrison said. "There will also be a slew of Fed speakers this week. To cap it all off, the third-quarter earnings season kicks off unofficially this week, with JPMorgan, Wells Fargo, BlackRock, BNY Mellon, and Fastenal reporting on Friday."

Oleg Bevz, managing partner of InputPR, said that the recent jobs data "calmed the storm in mainstream financial markets. The US 10-year Treasury note rose 3.962%, while the yield on the 6-month Treasury note closed Friday up 4.46%." Bevz added: "Bitcoin bounced back to nearly $63,520 in the Asian session on Monday morning, reflecting a 1.13% gain in 24 hours, after some selling over the weekend." "Investors are closely watching the Fed's next moves, given the impact of macroeconomic trends on Bitcoin."

While the overall cryptocurrency market slumped mid-week last week, with total capitalization falling 3% to $2.21 trillion, FxPro senior market analyst Alex Kuptsikevich pointed out that "positive sentiment returned" on Thursday, after "buyers found Bitcoin attractive at $60,000." The Crypto Fear & Greed Index is now in the middle, having moved out of the fear zone.

"Last week, Bitcoin successfully jumped out of the area where the 50-day moving average and the $60,000 round level intersect," he added. "The cryptocurrency has gained 1.5% since the start of Monday, reaching $63.5K, putting the price back above the 200-day moving average. The consolidation mentioned above would be a bullish signal, suggesting that the pullback is over and buyers are taking control."

Bitcoin is now trading above the 200MA, at $64,109, up 2.75% on the day. As Kuptsikevich pointed out, it remains to be seen if KingCrypto can sustain above the $64,000 support level and consolidate above the 200MA.

John Glover, chief investment officer at Ledn, said that Bitcoin bulls need to continue to move higher in the near term. Otherwise, BTC could decline back to the lower end of its trading range for the past six months. "On the top test, the pennant (blue line) held again, and after that we saw a decent sell-off toward current levels," Glover said in a note. "The further we move down this pennant, the less valid it becomes as a continuation pattern."

He said: "The market seems to be waiting for the November election before deciding a clear direction for the price." "While the consensus is that a Republican win would be more supportive of digital asset prices than a Democratic win, both parties have made positive statements about digital assets, so in my opinion, the uptrend will be there regardless of the outcome."

Glover concluded: "Continue to be patient, but keep a close eye on the $49,000 level, as a break below it would invalidate the count and open up downside.

TradingView analyst Arman Shaban also warned that Bitcoin could retest lower support levels, pointing to the conflict in the Middle East as one factor that could derail the ongoing bull run. "By analyzing the weekly Bitcoin chart, we can see that the current price is about $62,640," he said. "We observed strong demand as the price fell to $60,000 due to the ongoing conflict between Iran and Israel, as mentioned before, and the price has bounced back 4% to the current level."

Shaban cautioned: "If the conflict continues, Bitcoin is likely to fall to the target levels of $60,000 or even below $52,000." "So, please remember that Bitcoin's most crucial support level currently is between $60,000 and $60,200."

Overall, Bitcoin and the cryptocurrency market are currently facing multiple factors, including the Fed's monetary policy direction, macroeconomic conditions, and geopolitical risks. Investors need to closely monitor changes in these factors and make adjustments accordingly to seize opportunities in a fluctuating market.