Fed meeting minutes show divergent views on rate cuts, BTC falls below $61,000

Original author: BitpushNews

U.S. stocks rose on Wednesday, while crypto markets fell, after minutes from the Federal Reserves September meeting showed policymakers were divided on how deep to cut interest rates in the near term.

The minutes showed that an overwhelming majority of officials supported a larger rate cut, but a minority called for a 25 basis point cut, arguing that the 50 basis point cut ultimately approved was too large.

Some participants indicated that they would prefer a 25 basis point reduction in the target range at this meeting, while a number of others indicated that they might support such a decision, the minutes said.

After the release of the minutes, market observers lowered their expectations for a rate cut in November. The FedWatch tool of the Chicago Mercantile Exchange showed that the probability of the Federal Reserve cutting interest rates by 25 BP in November was 70.4%, and the probability of not cutting interest rates rose to 29.6%.

According to Bitpush data, BTC traded below $62,000 for most of the day. After lunch, bears further exerted their strength, pushing the price below $61,000. As of the time of writing, BTC was trading at $60,736, down 2.25% in 24 hours.

Altcoins generally fell. Among the top 200 tokens by market value, Baby Doge Coin (BabyDoge) led the gains, up 26%; Chiliz (CHZ) rose 15.5%; SuperVerse rose 5.2%; FTX Token (FTT) had the largest decline, up 9.6%; cat in a dogs world (MEW) fell 8.8%; and Mog Coin (MOG) fell 8.7%.

The current overall market value of cryptocurrencies is $2.13 trillion, and Bitcoin’s market share is 56.7%.

In the U.S., stocks opened higher and remained higher at the close. At the close, the SP, Dow and Nasdaq all rose, up 0.71%, 1.03% and 0.60% respectively.

Analyst: STH could see panic selling if BTC falls below $61,600

CryptoQuant analyst Burak Kesmeci stressed that STH could see panic selling if BTC falls below $61,600.

Bitcoin investors can be divided into short-term holders (STH) and long-term holders (LTH). Long-term holders refer to BTC addresses that hold Bitcoin for 155 days or more, while short-term holders are traders who hold it for less than the above time span.

This means that the current price action may depend more on short-term holders. Kesmeci explained that the current average cost of Bitcoin for short-term holders of 1-3 months and 3-6 months is $61,633 and $64,459, respectively. As shown in the chart, the price is currently squeezed between this particular range, waiting for a directional breakout. The analyst claims that if $64,500 is broken, bulls may gain momentum.

On the other hand, if the average cost for 1-3 month holders of $61,600 falls below, investor patience will be severely tested, potentially leading to “panic selling” by short-term holders at a loss.

Three Factors That Could Push Bitcoin Above $80,000

Bitwise Chief Investment Officer Matt Hougan said in a recent article that Bitcoin needs three factors to hit a new high - $80,000.

The first factor Hougan highlighted was the U.S. election, saying: “The U.S. election is huge for crypto. Most people think of it as a binary outcome: Trump = good, Harris = bad. There’s no doubt that a Republican victory would bode well for crypto given the strong and growing support for the space, but I think the situation on the Democratic side is more nuanced.”

The second factor is economics. Hougan explained: “The number one reason people are attracted to Bitcoin is simple: you can’t trust the government to manage money. This idea gave birth to Bitcoin in 2008 and remains a strong driving force for cryptocurrencies today… The Fed is currently expected to cut interest rates by another 50 basis points before the end of the year, and China is also expected to launch additional fiscal stimulus. If we get both, my guess is that we will rebound in the fourth quarter. If we don’t, I think disappointment will likely weigh on the market.”

The third factor Hougan believes is that cryptocurrencies “will not experience major negative surprises.”

He explained: “The last thing we need for an $80,000 rally to occur is a period without major surprises. No major hacks. No massive new lawsuits. No previously locked-up tokens suddenly hitting the market. Unfortunately, the history of crypto is plagued by countless such surprises. Over the past few quarters, the release of previously locked-up Bitcoin from the failed exchange Mt. Gox and government vaults has caused the market to remain range-bound.”