Bitcoin And Ethereum Euphoria Built Around Rate Cuts Could Be Ruined By Retail Traders, Says Crypto Data Intelligence Platform

The Federal Reserve implemented its first rate cut since March 2020. The move aimed to combat inflation and economic concerns.

What Happened: The rate cut was widely anticipated, with an 85% likelihood leading up to the announcement. This anticipation led to a bullish reaction in both cryptocurrency and traditional equity markets. However, prices quickly reversed as traders executed buy orders.

Santiment noted that this pattern is familiar, having been observed after events like the Ethereum (CRYPTO: ETH) merge and Bitcoin (CRYPTO: BTC) halving. Traders often become euphoric, expecting prices to soar, only to be surprised by a retracement.

Despite the initial bullish reaction, the market’s response may not be as straightforward. Traders are advised to monitor sentiment and funding rates closely. Positive sentiment could indicate greed, while negative sentiment might signal a buying opportunity.

Two more rate cuts are expected by the end of 2024, potentially lowering interest rates by 100 basis points heading into 2025, according to the report.

See Also: Elizabeth Warren Urges Fed To Slash Rates By 0.75%; Veteran Investor Warns Even 0.5% Cut Could ‘Reduce Trump’s Chances Of Winning’

Why It Matters: The Federal Reserve’s decision to cut interest rates by 50 basis points to a range of 4.75% to 5% marks a significant shift in monetary policy.

Jerome Powell, the Fed Chair, defended the move, stating it was necessary to support the labor market and prevent economic harm. Powell emphasized the importance of acting preemptively to safeguard the economy, highlighting the Fed’s cautious, data-driven approach.

The rate cut has broader implications for consumers, potentially affecting mortgage rates, credit card interest rates, and auto loan rates. This trickle-down effect could influence consumer spending and borrowing behavior.

Despite the initial market euphoria, Powell’s cautious remarks on the future rate path have injected uncertainty into the markets. The Fed’s dot plot indicates further easing ahead, with additional rate cuts expected in the coming years.

Price Action: Bitcoin is trading at $61,950.10, up 0.32% in the last 24 hours. Year to date, it has gained 40.14%. Meanwhile, Ether is currently priced at $2,357.76, rising 0.92% in the last 24 hours. Year to date, it has increased 0.19%, according to data from Benzinga Pro.

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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote

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