Even as the S&P 500 reaches new highs, Bitcoin (BTC) fails to mirror the optimistic trend in equities. The leading cryptocurrency continues to trade sideways, dipping below $61,000 on Wednesday morning. Its price currently sits at $60,500, reflecting a 2% decrease in the past 24 hours (as of 5:15 AM ET, according to The Block). However, Bitcoin remains up 35% year-to-date, despite falling short of its record-breaking $73,000 mark in mid-March.
Fed’s Dovish Tone Buoys Equities, Raises Rate Cut Speculation
Recent statements by U.S. Federal Reserve Chair Jerome Powell may be influencing market behavior. Powell indicated “quite a bit of progress” on inflation but emphasized the need for more confidence before considering rate cuts. This dovish stance, delivered at the ECB Forum on Central Banking in Portugal, coincided with a rise in equity market futures.
Global Stocks Reach New Heights
The Fed’s comments appear to have bolstered investor sentiment in traditional markets. Dow Jones Industrial Average and S&P 500 futures ticked upwards in pre-market trading, and by Tuesday’s close, the S&P 500 surpassed its all-time high, reaching 5,509.01. The Dow Jones and Nasdaq Composite also closed higher, exceeding their respective record highs set earlier in the week.
European Markets Follow Suit
European and UK stock markets mirrored the positive trend on Wednesday. London’s FTSE 100 and the pan-European Stoxx 600 index both climbed in early trading.
Also Read: Germany Liquidates $95 Million In Bitcoin (1500 BTC): Market Braces For Impact
Increased Chance of Rate Cuts in September?
Market participants are closely monitoring inflation data to anticipate the Fed’s next move on interest rates. Powell’s dovish remarks have fueled speculation of a potential rate cut in September. According to the CME Group FedWatch Tool, the probability of a rate cut at the September FOMC meeting has risen from 59% to 67%.
The Fed, aiming for a 2% inflation rate, initiated rate hikes in March 2022. The last increase occurred in July 2023, leaving rates at a 23-year high between 5.25% and 5.50%. With inflation remaining a key concern, investors are watching closely for further signals from the Fed that could impact both traditional and cryptocurrency markets.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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