Will Bitcoin Reach $120,000 This Week Despite Fed Rate Cut?

Bitcoin has struggled to break out of its trading range, remaining trapped below £117,000, while other major cryptocurrencies have seen gains following the Federal Reserve's recent interest rate cut. Ethereum has surged past £4,600, indicating a shift in market sentiment towards altcoins.

Last updated: 04 October 2023 (BST)

Key Takeaways

• Bitcoin remains below £117,000, with a dominance drop to below 57%.
• Ethereum surpassed £4,600, boosted by increased trading volume.
• Over £350 million was liquidated in the crypto market in the past 24 hours.
• The Federal Reserve cut interest rates by 25 basis points.
• Market volatility has shifted traders' positions, with many betting against Bitcoin.

Bitcoin's Current Market Position

As of now, Bitcoin is consolidating in the £116,000 range, reflecting a lack of momentum despite a broader positive sentiment in the cryptocurrency market. This stagnation can be attributed to several factors, including market reaction to the Federal Reserve's recent monetary policy decisions.

Market Reactions to the Federal Reserve's Rate Cut

On Wednesday, the Federal Reserve implemented its first interest rate cut of the year, reducing the benchmark interest rate by 25 basis points to a range of 4.00% to 4.25%. Such cuts typically lead to increased liquidity in the market, often benefiting risk assets, including cryptocurrencies.

Despite this cut, Bitcoin has struggled to gain traction. Currently, Bitcoin's dominance has fallen below 57%, suggesting that capital is flowing into altcoins. This shift has allowed altcoins to capture approximately 30% of the total market share, indicating a growing interest in alternative cryptocurrencies.

Ethereum and Other Major Coins Gain Traction

Ethereum (ETH) has emerged as a leader in this upward movement, breaking past £4,600 with a notable increase in trading volume of 51% over the last 24 hours. Other coins, like XRP and Dogecoin, have also experienced increases of 1.24% and 4.40%, respectively.

Market Liquidity and Positioning

The recent liquidity events have had a significant impact on market participants. Over £350 million was liquidated from the cryptocurrency market in the last 24 hours, with long position traders losing approximately £188 million. This level of liquidation highlights the volatility that continues to plague Bitcoin and other cryptocurrencies.

Interestingly, more than £400 million in Bitcoin shorts face potential liquidation should Bitcoin rebound to £118,000. Current open interest in Bitcoin has decreased by 1.01% in the same period, signalling a bearish sentiment among traders.

Traders' Sentiment Shifts

As of this writing, more than 54% of Binance derivatives traders with open BTC positions were long. However, this number has shifted, with reports suggesting that over 52% of those traders are now betting against Bitcoin. This change reflects increasing uncertainty and caution among market participants.

Market Capitalisation and Economic Outlook

The global cryptocurrency market capitalisation currently stands at approximately £4.08 trillion, reflecting a modest increase of 0.81% in the last 24 hours. While Bitcoin continues to struggle, the overall market shows signs of resilience, especially in light of the Federal Reserve's dovish guidance.

Stock Market Reactions to Economic Changes

The stock market exhibited mixed results following the Federal Reserve's announcement. The Dow Jones Industrial Average saw a gain of 260.42 points, or 0.6%, closing at 46,018.32. In contrast, the S&P 500 closed down by 0.1%, and the Nasdaq Composite fell by 0.3%. This divergence illustrates the complex interplay between traditional financial markets and the cryptocurrency space.

Future Predictions for Bitcoin

Analysts remain divided on Bitcoin's near-term future. IncomeSharks, a well-known account on social media, projects that Bitcoin could reach £120,000 by the end of this week or over the weekend. This prediction reflects a generally bullish sentiment among some analysts, despite current price stagnation.

Technical Analysis Insights

Technical analyst CrypNuevo has echoed similar sentiments, suggesting that Bitcoin could soon hit the £120,000 mark. Additionally, Ethereum's price chart has been noted for a “bullish cross,” where a short-term moving average crosses above a long-term moving average. This formation could indicate a potential bullish trend for Ethereum, which has previously seen significant price increases after similar patterns.

Ethereum's performance has been remarkable, with surges of 60% and 24% in July and August respectively, following similar bullish signals. With analysts predicting a potential move above £5,000 for Ethereum this month, the market is keenly watching for any signs of upward momentum.

Conclusion: What Lies Ahead?

As we look ahead, the cryptocurrency market remains in a state of flux. While Bitcoin struggles to break free from its current range, altcoins are benefiting from increased interest and trading volume. The Federal Reserve's interest rate cut may provide a backdrop for potential growth, but market sentiment remains cautious.

Investors should remain vigilant, as the market's volatility can result in rapid changes. Monitoring the evolving situation and understanding key indicators will be crucial for navigating this dynamic landscape. Will Bitcoin manage to reclaim its position, or will altcoins continue to steal the spotlight? Only time will tell.

#Bitcoin #Ethereum #CryptoMarket

FAQs

What caused Bitcoin's recent price stagnation?

Bitcoin's price stagnation is primarily due to market reactions to the Federal Reserve's interest rate cut, alongside a shift in trader sentiment towards altcoins.

How has the Federal Reserve's rate cut impacted cryptocurrencies?

The Federal Reserve's rate cut typically increases market liquidity, benefiting risk assets like cryptocurrencies. However, Bitcoin has not responded positively, remaining below key price levels.

What is a bullish cross in cryptocurrency trading?

A bullish cross occurs when a short-term moving average crosses above a long-term moving average, indicating a potential upward price trend.

How much was liquidated from the cryptocurrency market recently?

Over £350 million was liquidated from the cryptocurrency market in the last 24 hours, with a significant portion of losses coming from long position traders.

What are analysts predicting for Bitcoin's future price?

Some analysts predict Bitcoin may reach £120,000 soon, while others remain cautious due to current market conditions and trader sentiment.