Asset classes rose across the board on Friday, with stocks, cryptocurrencies and gold rebounding, with less than six days left before the Federal Reserve's historic policy shift.
Much of the market's gains are due to investor expectations that the Federal Reserve may announce a 50 basis point rate cut after the Federal Open Market Committee meeting next Wednesday. Bill Dudley, former president of the New York Fed, said there is "a strong case" for further rate cuts.
The CME FedWatch tool currently shows a 49% chance of a 50 basis point rate cut, up from 28% on Thursday.
According to Bitpush data, BTC surged by more than $1,500 earlier in the day, jumping from $58,000 to $59,700, and rose above $69,000 after the U.S. stock market closed. As of press time, BTC is trading at $60,280, up 4.24% in 24 hours.
Like the broader market, Altcoin had a strong week, with more than 90% of the top 200 tokens seeing gains. Nervous Network (CKB) led the gains, up 45.3%, Pol (POL) up 12.1%, and Popcat (POPCAT) up 11.9%. Sun (SUN) was the biggest loser, down 6.6%, while BinaryX (BNX) fell 5.4% and Worldcoin (WLD) fell 5.1%. The overall cryptocurrency market cap is currently $2.1 trillion, with Bitcoin accounting for 56.4%.
US stocks continued to rise. As of the close, the S&P, Dow Jones and Nasdaq indexes rose by 0.54%, 0.72% and 0.65% respectively. Among them, the S&P 500 and Nasdaq recorded their largest weekly gains since November last year.
Volatility is expected to increase further
Bitcoin finally ended the week in an uptrend. Analysts at Secure Digital Markets said: "This price action is consistent with the recent pattern of increased volatility in low time frames, fluctuating within a six-month descending channel. If this trend continues, we could easily see BTC testing the $62,000 to $64,000 range next week."
As for Ethereum, the analyst said: “Ethereum (ETH) continues to underperform, as highlighted on the ETH/BTC chart. The daily chart shows that the bearish momentum of the ETH/BTC pair shows no signs of slowing down, indicating that it may have difficulty keeping up with Bitcoin in the short term.”
While the rate cut is good news for risk assets, OKX Global Chief Commercial Officer Lennix Lai believes that asset prices are unlikely to "only go up" from now on, so traders should be prepared for continued volatility.
“Given the current uncertainty in the market, the market is likely to be quite volatile for the rest of the month as traders react to broader economic indicators,” Lai said. “While short-term volatility is to be expected as traders react to economic indicators, increased institutional participation in the cryptocurrency market is likely to provide more stability and liquidity in the medium to long term.”
According to an Economist Impact Report commissioned by OKX, “69% of institutional investors plan to increase their allocation to digital assets in the next 2-3 years, indicating that confidence in the cryptocurrency market is growing despite short-term uncertainty.”
Regarding the drivers behind Bitcoin’s recent price action, Lai said that it is “largely influenced by expectations of upcoming rate cuts and speculation about a new rate cut cycle. These macroeconomic factors, coupled with changes in investor sentiment, are driving market dynamics.”
He noted: “Currently, BTC’s key support and resistance levels are around $50,000. This area is crucial for traders as it could determine the next direction of BTC’s price action. That being said, we may see these levels shift in the coming months as institutional participation increases and mainstream adoption grows.”
He said that the outlook for BTC in the short term seems cautious, but he is optimistic about the long-term outlook, which is supported by a variety of factors, including increasing institutional adoption and investment; increasing regulatory clarity in major markets; and the continuous expansion of the crypto ecosystem.
According to Jason Pizzino, a cryptocurrency analyst and investor, the next phase of Bitcoin’s bull run will begin once BTC flips $61,500 from resistance to support.
“If we start to see some testing and closing above $58,000 in the short term, that could be a nice early bounce that will lead to a test of the more important level in my analysis around $61,500, which was the 50% correction from March to August, which is the next key level for Bitcoin to test, overcome and consolidate, and basically the next phase of the bull run, pushing to new all-time highs,” Pizzino said in a YouTube show update.
Pizzino also believes that volatility may still play a major role and Bitcoin has the potential to fall more than 15% from current levels, but the bullish thesis will not be invalidated.
He said: “Bitcoin is still above about $52,000, $53,000, the August low of $49,000, these key levels, we have looked at previous downside levels - if Bitcoin falls again and goes all the way back to around $40,000, it will still be in a macro bull market. From there, Bitcoin closes above $61,500 again, it will start to be on the way up.”
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