Bitcoin price is under severe pressure due to uncertainty over interest rate cuts

The year 2024 began with extremely high expectations about the number of interest rate cuts the Federal Reserve would implement. This coupled with the launch of spot Bitcoin ETFs (BTC) and the upcoming ones halving ensured that the Bitcoin price experienced a strong phase.

However, after the launch of the Bitcoin ETFs, the price of Bitcoin fell sharply due to the sales of the Grayscale fund. However, there is also sudden uncertainty about how many interest rate cuts central banks will implement in 2024.

Bitcoin ETFs are on the rise, easily overtaking silver

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Uncertainty is not good for Bitcoin price

Investors started this year expecting that the US Federal Reserve would implement its first interest rate cut of 0.25 percent in March 2024.

The probability of a rate cut in March has now fallen to 43.5 percent, compared to 88 percent exactly a month ago.

Interest rate cuts are generally possible bullish for the Bitcoin price, therefore the change in this expectation puts downward pressure on the Bitcoin price.

What is noteworthy is that the Bank of Japan, the country's central bank, may be the first to make a decision. Unfortunately, this decision will not be positive for us as it will result in an increase in interest rates.

Two weeks ago, the market expected interest rates in Japan to remain negative until the second half of 2024. There is now an 80 percent chance that the Bank of Japan will raise interest rates by 10 basis points in April, meaning there will no longer be negative interest rates.

What does this mean for the Bitcoin price?

The high expectations for the number of interest rate cuts in 2024 are currently changing very quickly. As a result, interest rates this year could be significantly higher than most traders expected at the start of the year.

That's one bearish development for Bitcoin and this could prove to be a big test for the halving narrative.

Typically, after each halving, Bitcoin started a new bull run pretty quickly, which then started a new one All-time high gave in. However, previous halvings have also seen extremely low interest rates and a very favorable monetary environment.

However, since this is not the case, we still have to wait and see how strong the effect of the halving actually is. For the first time in Bitcoin history, the halving narrative may be at odds with macroeconomic conditions.

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