Last week, Bitcoin, the top ranked cryptocurrency, reached an amazing intraday all-time record of just under $125K. That has proven a short lived revival. As of Tuesday, its price retreated almost 3%, closing just above $113,000. This move comes as traders begin to recalibrate their expectations for when interest rate cuts will be delivered by the Federal Reserve.
That dramatic recent increase in Bitcoin’s value was mostly attributed to the market speculating about the potential for additional interest rate cuts. That’s what most investors are betting on for the Fed to do as we approach their next meetings, especially August and September. Even more interesting is how much of a direct impact these moves would have on Bitcoin’s general market performance.
Investors have their eyes peeled for news from today’s start of the Federal Reserve’s annual economic symposium in Jackson Hole, Wyoming. This highly anticipated event should shape the market’s view of the central bank’s policy course for the rest of the year.
Satraj Bambra, a noted market analyst, remarked on the prevailing sentiment among traders:
“With Powell speaking at Jackson Hole, we typically see profit-taking ahead of his remarks.”
Most market participants are bracing for this volatility. As they anticipate further communication from the Fed regarding interest rates, they may choose to de-risk their positions, leading to fluctuations in Bitcoin’s price.
Bambra further noted the general trend during periods of uncertainty surrounding Fed communications:
“Any time there’s communication uncertainty from the Fed, you can generally expect some profit-taking as traders de-risk their positions.”
The associated implications of these expected policy shifts might drastically shape Bitcoin’s fate in the next weeks ahead. Market participants have been positioned for possible changes in policy direction as they look for surety from central bank administrators.