Crypto markets have seen a slight uptick following an expected rate cut by the US central bank on Wednesday, and a bigger jump could be next, analysts say.
The central bank made three successive reductions in interest rates in the total amount of 0.75% in the period of three months from September to December.
Despite the cryptocurrency’s long-term growth, any decline has triggered a short-term selloff, following a classic “buy the rumor, sell the news” pattern, according to onchain analytics firm Santiment he said on Thursday.
However, “there is usually a rebound after the dust settles,” it added, which can provide predictable trading opportunities.
“So far, this latest rate cut has been no different. Look for a mild level of FUD or retail selling to indicate that the post-cut mild decline is over.”
Lower interest rates and lower borrowing costs tend to increase risk appetite and capital flowing into speculative assets, such as crypto.
Fed rate cut widely expected
CoinEx chief analyst Jeff Ko told Cointelegraph that the Fed’s latest rate cut was “broadly expected and fairly priced in,” but his updated dot chart showing where Fed policymakers think rates will go next is “a little hawkish.”
Related: Embattled Fed cuts rates, but Bitcoin’s ‘fragile range’ keeps BTC below $100k
More importantly, Ko said, the $40 billion in short-term purchases of government bonds “is technically a financial system liquidity maneuver to lower short-term rates, not a massive stimulus-focused program.”
“But markets interpreted this as mildly bullish, with US stocks rising and helping Bitcoin recover along with broader risk-on sentiment.”
Bitcoin markets are maturing
Fidelity Investments director of global macro Jurrien Timmer looked at the longer time frame, taking notes on Thursday that Bitcoin (BTC) has underperformed the stock market this year. Still, he said the markets are maturing compared to previous cycles.
“It’s hard to tell in real time if a new (crypto) winter is upon us, but looking at the evolving wave structure of Bitcoin’s network maturation curve, we can see that the latest bull market looks quite mature.”
There was a slight uptick in crypto markets during the morning trading session on Friday, with Bitcoin recovering from its decline after dipping below $90,000 to jump to $93,500 on Coinbase.
However, resistance at this level again proved too strong, sending the asset back to $92,300, where it is trading at the time of writing.
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