Why is Bitcoin price down despite Powell’s hint of 2 more rate cuts in 2024?

Bitcoin soared in mid-September when the US Federal Reserve announced the first interest rate cut in more than four years. As such, many expected this to be the case after Powell’s speech on Monday, but they have been proven wrong.

It begs the question why BTC did not produce impressive gains despite the Fed President’s hint of upcoming rate cuts this year.

Why no bomb, BTC?

It was at the end of August this year that Jerome Powell, chairman of the US central bank, said it was time for the Fed to follow the example of the ECB, the Bank of England, the Bank of Canada and others , and lower local interest rates. Bitcoin, considered a riskier asset that is heavily influenced by macroeconomic events, immediately surged.

However, it fell sharply in the following weeks from over $65,000 to under $53,000 (September 7) in anticipation of the Fed’s actual rate cut. This happened on September 18, and the first 50 basis point rate cut since 2020 sent the price of BTC soaring over the next ten days, roughly from $59,000 to $66,500 last weekend.

However, the cryptocurrency has lost some traction since then, and all eyes were once again on Powell yesterday when he was expected to address the Fed’s monetary policy pivot in Nashville, Tennessee.

In his speech, the Fed chairman suggested the central bank will likely cut rates two more times this year by 25 basis points each. This would mean a total reduction of 1% in a few months.

But did BTC crash?

While this sounds like promising news for riskier assets like BTC, the cryptocurrency failed to mimic its previous performance and failed to produce substantial gains. On the contrary, it is down more than 2% in the last 24 hours and is now trading at a multi-day low of $62,500 after being rejected at $64,000 earlier today.

Bitcoin/Price/Chart 01.10.2024. Source: TradingView

Recall that a few industry experts warned of potential price calamity for BTC following the Fed’s rate cut. First, it was Arthur Hayes who said that the rate cut could “cripple” the crypto market, especially in the short term.

Bitfinex’s research department went further, indicating that the price of BTC could fall to $45,000 after the Fed’s pivot.

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