Bitcoin saw a serious price jump as it reached for one-month highs on Monday. This price rise was after Bitcoin sustained the rally after the Federal Reserve’s super-sized rate cut last week as the yen’s sharp gains has a pause this month. The currency is up 1.4% in September.
The dollar strengthened against the yen last week after policy meetings in both the U.S. and Japan. The yen hit its highest level in two weeks at 144.50 yen . It was around 144.08 early on Monday.
Japan’s yen gain
The Bank of Japan (BOJ) left interest rates unchanged last week and indicated it was not in a hurry to hike them again. That decision, coming just days after the Fed’s 50 basis points rate cut, put a pause to the yen’s sharp gains this month. The currency is up 1.4% in September.
With Japan closed for Autumnal Equinox Day, the main driver of trade was expectations around further Fed rate cuts and the gains those have spurred in equities, commodity currencies and other risk assets.
Bitcoin price rise
Bitcoin saw a rise and was up 0.8% above the price of $63,200 and not far from one-month highs.
Effect of rate cut on currencies
The Australian dollar was flat around $0.68 , digesting its rise of more than 3% in less than two weeks.
The U.S. dollar index , which measures the greenback against major currencies, gained slightly to 100.8, continuing to stay above the one-year low it hit last week.
The pound was down 0.1% at $1.3310 , staying near highs it hit on Friday after the release of strong British retail sales data.
Analyst on Fed’s rate cut
The Fed’s rate cut “appears to have calmed market fears of a U.S. recession”, Goldman Sachs said in a note. “Our G10 FX team expect a slight rebound for the U.S. dollar over the next 3 months, before easing again on a 6- and 12-month view.”
Markets expect the Fed to keep lowering borrowing costs, with the odds of another half-point reduction at the Central Bank’s November meeting.
Fed futures traders have priced in 75 bps in rate cuts by the end of this year, and nearly 200 bps in cuts by December 2025 that will take the Fed’s policy rate by the end of 2025 to 2.75%, according to CME FedWatch, opens new tab.
The U.S. Treasury yield curve has been steepening after the Fed’s rate cut, and investors added to bets favoring a second outsized rate cut after Fed Governor Christopher Waller said on Friday he was worried inflation may soon be running substantially below the central bank’s 2% target.
Bitcoin rally prediction
Bitcoin is poised for exciting movements as it aims for new all-time highs. With substantial institutional interest, the aftermath of the halving event, and positive market sentiment, the conditions are ripe for potential growth. While there are challenges to consider, the overall outlook remains promising. Predictions from various analysts suggest Bitcoin could reach anywhere between $100,000 to $150,000 by 2025. Though some are being more conservative, expecting a peak closer to $90,000 in 2024. However, these predictions rely on favorable market conditions, regulatory developments, and broader economic factors.
