Bitcoin and other cryptocurrencies experienced a slight decline on Monday after reaching 20-month highs. However, prices remained close to the peak of a recent rally. Looking ahead, there are several upcoming events that could potentially reignite market sentiment, including the next Federal Reserve decision.
In the past 24 hours, the price of Bitcoin has fallen by 4% to $42,150. This decrease comes after reaching levels near $44,500 on Friday, which marked the highest point for the leading digital asset since early April 2022. It’s worth noting that this surge comes after a prolonged bear market. Over the past two months, Bitcoin has seen a remarkable increase of around two-thirds, signaling a potential return to a crypto bull market.
Several factors have contributed to the recent gains in crypto prices. One key factor is the growing optimism surrounding the approval of the first spot Bitcoin exchange-traded fund (ETF) by U.S. regulators. This development is expected to generate significant investor interest and drive further growth in the industry. Additionally, the overall macroeconomic situation, including expectations of multiple interest rate cuts by the Federal Reserve next year and a limited token supply, has bolstered market confidence.
Similar to the Dow Jones Industrial Average and S&P 500, Bitcoin has benefited from macro tailwinds stemming from decreasing inflation and slowing growth. This suggests that interest rates may significantly decrease next year from their generational peak.
Given these factors, the upcoming Federal Reserve monetary policy meeting on Tuesday and Wednesday is of great importance. While it is unlikely that the central bank will lower borrowing costs this month, all eyes will be on Fed Chairman Jerome Powell’s press conference for any indications of future rate cuts. Traders are currently pricing in the first rate cut as early as March, so any hint of dovish commentary or the potential for earlier rate reductions could reignite the crypto rally, especially in the absence of other major catalysts such as news on the approval of a spot Bitcoin ETF.
In addition to Bitcoin, other cryptocurrencies have also experienced declines. Ether, the second-largest crypto, fell by 4% and is now below $2,250. Smaller tokens and altcoins have also shown weakness, with Cardano down 5% and Polygon plunging 5%. Even memecoins haven’t been spared, as Dogecoin dropped 2% and Shiba Inu shed 4%.
In conclusion, while there has been a slight dip in Bitcoin and other cryptocurrencies, the overall market remains optimistic. Key events such as the Federal Reserve decision and the potential approval of a spot Bitcoin ETF have the power to drive further growth and signal the beginning of a new crypto bull market.