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Bitcoin Pops and Drops | Podcast

This podcast highlights Bitcoin’s record-breaking surge fueled by anticipated Fed easing.

However, it also flags the potential for a “hawkish” tone from the Fed, which could introduce headwinds. Despite this, factors like positive seasonality, supportive regulatory developments, and continued global easing are expected to maintain a bullish outlook for Bitcoin in the long run.

Coindesk: https://www.coindesk.com/markets/2024/12/16/bitcoin-soars-to-record-high-above-106-k-then-retreats-as-hawkish-fed-rate-cut-looms

CNBC: https://www.cnbc.com/2024/12/16/crypto-market-today.html

  • Record High: Bitcoin touched $106,509 before retracting slightly, marking a new all-time high. (Source: “Bitcoin Soars to Record High Above.pdf” & “Bitcoin crosses $106,000 ahead of this week’s Fed decision”)
  • Fed Decision: The Federal Reserve is widely expected to announce a 25 basis point rate cut on December 18th. (Source: Both)
  • Hawkish Concerns: There are worries the Fed might adopt a “hawkish” stance, hinting at a slower pace of future rate cuts. This could strengthen the dollar and potentially dampen Bitcoin’s upward trajectory. (Source: “Bitcoin Soars to Record High Above.pdf”)
  • Expert Opinion: Marc Chandler, chief market strategist at Bannockburn Global Forex, suggests the Fed might acknowledge a stronger economy and indicate fewer rate cuts than previously anticipated. (Source: “Bitcoin Soars to Record High Above.pdf”)
  • Positive Catalysts: Seasonality is favorable for Bitcoin, and President-elect Trump’s positive regulatory stance towards crypto is expected to benefit the market. (Source: “Bitcoin Soars to Record High Above.pdf”)
  • Global Easing: Continued rate cuts from the Fed, coupled with anticipated easing from China, are expected to contribute to rising global liquidity, further bolstering Bitcoin’s bull case. (Source: “Bitcoin Soars to Record High Above.pdf”)
  • Correlation with Tech Stocks: Bitcoin often trades in a similar pattern to tech stocks, implying that lower interest rates generally benefit its price. (Source: “Bitcoin crosses $106,000 ahead of this week’s Fed decision”)
  • Inflation Gauge: The upcoming core PCE reading, a key inflation metric, will offer insights into whether recent rises in consumer price inflation are temporary or signal a more sustained trend. (Source: “Bitcoin Soars to Record High Above.pdf”)

What is driving Bitcoin’s recent price surge?

Bitcoin’s surge to new all-time highs above $106,000 is fueled by anticipation of the Federal Reserve’s interest rate cut. Lower interest rates generally weaken the dollar and increase the money supply, historically correlating with price increases. The potential for a friendlier regulatory environment under the incoming Trump administration, including the possible establishment of a national strategic Bitcoin reserve, further adds to the bullish sentiment.

How might the Fed’s decision impact Bitcoin’s price?

While a rate cut is expected, the Fed’s accompanying commentary and updated economic projections, particularly the “dot plot,” will be crucial. A “hawkish” stance, suggesting fewer or slower rate cuts than previously anticipated, could strengthen the dollar and Treasury yields, potentially hindering Bitcoin’s upward momentum.

What other factors are influencing Bitcoin’s market performance?

Beyond the Fed’s decision, market sentiment is also driven by positive seasonality for Bitcoin and expectations of easing monetary policies globally, especially from China. This combined with President-elect Trump’s positive signals toward crypto regulation contributes to a supportive macroeconomic environment.

What is the “dot plot,” and why is it important?

The “dot plot” is a chart visualizing individual Fed officials’ projections for future interest rates. It offers insight into the Fed’s outlook on the economy and monetary policy. If the December dot plot indicates fewer rate cuts than the September projection, it could signal a more hawkish stance, potentially dampening investor enthusiasm for risk assets like Bitcoin.

What is the significance of the upcoming core PCE reading?

The core Personal Consumption Expenditures (PCE) price index, the Fed’s preferred inflation gauge, will be released later this week. This data will provide insights into whether recent upticks in consumer inflation are temporary or indicate a more sustained trend. A significant rise in inflation could influence the Fed’s monetary policy decisions, potentially impacting Bitcoin.

How has Bitcoin performed in 2024?

Bitcoin has experienced remarkable growth in 2024, surging 145% year-to-date. The price has risen by 50% since the U.S. presidential election and nearly 8% this month alone.

What role does the global macroeconomic environment play in Bitcoin’s price?

Global macroeconomic factors, particularly monetary policies of central banks, significantly influence Bitcoin. A global trend of easing monetary policies, including rate cuts and increased liquidity, tends to benefit Bitcoin. Conversely, a shift towards tighter policies could negatively impact its price.

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