Bitcoin Breaks Higher: Is a Massive Rally Incoming?
Following the $19 billion leverage wipeout in early October, Bitcoin has been trapped in a small trading range. This coincides with concerns that sticky inflation may make it more difficult for the Fed to lower interest rates in the future. However, as traders await the Federal Reserve’s final interest rate decision of the year and this week’s most recent jobs report, Bitcoin crept higher on Sunday, regaining the $90,000 price tag. The largest cryptocurrency in the world increased by 2.6% over the day to $91,703, according to CoinMarketCap data. Thus, it rose from its low point at $85,000 at the start of December.
Shifting rate expectations ripple through crypto funding markets in Asia far more quickly than traditional asset classes. We’re seeing funding spreads and borrow costs move in lockstep with global rate guidance. This drives a critical re-evaluation of treasury strategies; many desks are diversifying liquidity across CeFi and DeFi venues to isolate against volatility and optimize opportunities as macro cycles accelerate.
Michael Wu, CEO of Amber Group
Fed’s Final Decision Nears as Traders Brace for Volatility
Inflation for services has decreased from its highest point last year, although it is still higher than that of commodities. The Fed’s aim for shelter costs is also exceeded. The Fed‘s disinflation objective has become more difficult as a result of this inconsistent achievement, and traders have become wary. Additionally, it has created doubt on the extent and timing of rate cuts, including the central bank’s final decision of the year on Wednesday. As a result of that arrangement, gold and silver have increased in value.
Low liquidity is still an issue for the market. Since the October 10 event, order books were wiped out, and market makers are shy to jump back in in size.
Ryan McMillin, chief investment officer at Merkle Tree Capital
Is a Fed Rate Cut the Spark Crypto Needs?
Risk assets usually benefit from a reduction in the Fed’s funds rate because borrowing becomes more affordable. The idea is that this might cause riskier assets, like cryptocurrency, to rise. A cut is more than just certainty, according to McMillin, since economic data is finally flowing normally once again. The market is expected to rise after the Fed ends quantitative tightening on December 1, he continued.
The rate cut might be the catalyst for that to start,”
McMillin
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