Analysts say that after the Federal Reserve's expected interest rate cut on Wednesday, the crypto market saw a slight rebound, with a larger rally likely to follow.
The central bank has cut rates three times in a row from September to December, totaling 0.75%.
According to on-chain analytics firm Santiment on Thursday, although the long-term outlook for cryptocurrency fundamentals is bullish, each rate cut triggers short-term sell-offs, aligning with the classic "buy the rumor, sell the news" pattern.
However, it added that typically a rebound occurs "after the dust settles," which can provide predictable trading opportunities.
Lower interest rates and cheaper borrowing costs usually enhance risk appetite and lead to more capital flowing into speculative assets like cryptocurrencies.
Jeff Ko, chief analyst at CoinEx, told Cointelegraph that the Fed's latest rate cut was "widely anticipated and largely priced in by the market," but its updated dot plot indicates that policymakers' judgment on the next direction of interest rates is "slightly hawkish."
More importantly, Ko stated that the $40 billion purchase of short-term government bonds is a "technical operation for the liquidity of the financial system, aimed at lowering short-term rates, not a large-scale, stimulus-driven plan."
Fidelity Investments' global macro director Jurrien Timmer is looking at longer cycles, noting on Thursday that Bitcoin has underperformed compared to the stock market this year. However, he mentioned that the market is maturing compared to previous cycles.
During Friday morning trading, the crypto market showed slight recovery, with Bitcoin rebounding from a post-rate cut low below $90,000, rising to $93,500 on Coinbase.
However, the resistance at that level proved too strong, pushing the asset back down to $92,300, where it was trading at the time of writing.
Related: Reports say YouTube allows U.S. creators to receive payments in PYUSD stablecoin.
Original: “Bitcoin (BTC) rebounds on Fed rate cut, predicts larger gains ahead”
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