Gold price jumps… Bitcoin also 'soars' a month later

Source

JOON HYOUNG LEE

Summary

It reported that Bitcoin's price recently rose about 4%%, pre-reflecting expectations of a U.S. policy rate cut.
It stated that whether there will be a big cut at this FOMC will be an important factor for further upside momentum in crypto markets such as Bitcoin.
Considering on-chain data and the historical high correlation with gold, there is analysis that the crypto bull market could continue into early Q4.

Crypto Now

U.S. rate-cut expectations priced in

Bitcoin, up 4% to 115,000 dollars

If a big cut comes this month, further rally likely

Bitcoin is facing a 'crucial week' ahead of the U.S. decision on cutting the policy rate. Attention is focused on whether the U.S. central bank (Fed) will carry out a big cut (0.5% point reduction in the policy rate) at the Federal Open Market Committee (FOMC) meeting on the 16~17th. It is also being watched whether it will show a coupling (synchronization) with the recently surging gold price.

According to cryptocurrency market tracker CoinMarketCap on the 14th, the price of Bitcoin recently rose by about 4% from the previous 111,000 dollars range to the 115,000 dollars range. Earlier this month it had traded sideways around the 110,000 dollars level before rebounding.

What stimulated investor sentiment was expectations of a U.S. rate cut. This week, after the August producer price index (PPI), the August consumer price index (CPI), seen as the final variable ahead of the FOMC, were released in succession. Based on current macroeconomic indicators such as inflation and employment, analysis suggests the Fed is effectively expected to leave rates unchanged at this month's FOMC.

The key is whether there will be a big cut. The market judges that expectations of a rate cut have already been partially priced into markets such as Bitcoin. On the Chicago Mercantile Exchange (CME) FedWatch tool, the probability that the Fed will cut the policy rate in September has recorded 80~90% since last month. The probability of a big cut in September only rose into the 10% range this month.

There is analysis that this rate decision could determine Bitcoin's price in Q4 this year. On-chain analytics firm Glassnode explained, "Bitcoin is trapped in a box range of 110,000~116,000 dollars," adding, "this is because profit-taking and a slowdown in inflows to exchange-traded funds (ETF) have weakened the upside momentum."

Bitcoin has shown a high correlation with gold. A representative example is that when gold surpassed 3,500 dollars for the first time in April, Bitcoin's price rose in earnest one to two months later. U.S. crypto exchange Coinbase analyzed, "Considering solid liquidity, there is plenty of room for the crypto bull market to continue into early Q4."

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