Bitcoin Broke $62K After Fed Rate Cuts. Here’s What Traders Say Will Happen Next

Election 2024 coverage presented by
A 50 basis point cut by the Fed, and the first bitcoin (BTC) buy by a presidential candidate, kept digital assets in the green during the East Asia trading day, even though some market watchers are skeptical if the rally has any sort of legs.
Fed members expect median benchmark rates to come down to 4.4% by year-end, as reported, reflecting some 50 basis points (bps) more cuts in the next two Federal Open Market Committee (FOMC) meetings, according to the Fed’s quarterly economic projection.
Bitcoin is trading near $62K, up 2.4% in the last 24 hours. The CoinDesk 20 (CD20), a measure of the largest digital assets, is up 3.4%.
The broader crypto market moved higher. Solana’s SOL rose 6% to lead gains among majors, with BNB Chain’s BNB, xrp (XRP) and Cardano’s ADA rising as much as 4.5%. Memecoins dogecoin (DOGE) and shiba inu (SHIB) rose 4%.
In emailed comments, Chris Aruliah, ByBit’s Head of Institution, had a mixed view bout the rate cut’s impact on the crypto market.
“The broader global economic slowdown stipulated by softer economic indicators and geopolitical complexities is tempering investor sentiment,” Aruliah wrote in an emailed statement. “Therefore, while a 0.5% reduction in the Fed’s policy rate may provide a short-term boost to the cryptocurrency market, it is crucial to remain vigilant regarding the potential challenges posed by economic uncertainty and market fluctuations.”
In an interview with CoinDesk TV, Maelstrom’s Arthur Hayes argued that rate cuts as a whole aren’t necessary, and a 50 basis point rate cut would trigger a brief market rally but ultimately reveal deeper issues in the global financial system, leading to more depressed prices.
“At a high level, I think that they should not be raising rates. I believe that the U.S. economy is quite strong. If you’ve seen the GDP prints over the last eight or nine quarters, it’s been consistent growth,” he said during the interview. “Inflation is going to accelerate into the fourth quarter if they decide to continue cutting rates.”
The U.S. government’s heavy spending is driving rapid economic growth, which benefits Kamala Harris’s election chances, but cutting rates amid high inflation is seen as a mistake, he argued.
“I think that the response is going to be if the markets start to falter, they’re just going to do more of it and they’re going to make the problem even worse,” he continued.
In a note, Presto Research wrote that the market remains divided on the implications of the Fed’s 50 bps cut, with mixed reactions across asset classes, as concerns over growth and potential recession weigh on investor sentiment.
“Judging by last night’s market confusion, growth concerns clearly exist, and the market needs relief from them to rally. We are now firmly in ‘good news is good news’ territory,” Presto wrote.
On Polymarket, traders are confident that the Fed is nowhere close to being done cutting rates.
Bettors are giving a 41% chance of a 100 bps cut by the end of the year (meaning there’s another 50 bps cut in the bag), and a 38% chance of a 125 bps cut.
They are also putting their money on a 65% chance of a 25 bps cut in November and a 26% chance of a 50 bps cut during the same time.
For December, the consensus is that there’s a high chance of a further cut with a 50% chance of a 25 bps decrease, and a 33% chance of a 50 bps cut.
Elsewhere in crypto, Aleo, the native token of the Hashkey-backed privacy-focused zero-knowledge proof layer 1 blockchain is up over 14% after being listed on Coinbase.
Sui’s SUI and Fantom’s FTM are also up double digits, alongside a general recovery in AI tokens. The correlation between AI tokens and Nvidia appears to be weakening, as the chipmakers stock is down 3% over the last five days.
Edited by Parikshit Mishra.
Disclosure
Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.
Shaurya is the Deputy Managing Editor for the Data & Tokens team, focusing on decentralized finance, markets, on-chain data, and governance across all major and minor blockchains.