Bitcoin’s price saw a slight decline on Monday after a weekend rebound lost momentum, despite optimism surrounding potential interest rate cuts that kept the cryptocurrency trading near a one-month high.
Other cryptocurrencies also experienced a retreat after significant gains since Friday, buoyed by comments from Federal Reserve Chair Jerome Powell hinting at potential rate cuts. The weakness in the dollar, which hit a 13-month low, further supported crypto prices.
Bitcoin dropped 0.3% to $63,952.7 by 01:59 ET (05:59 GMT). However, the token’s upward momentum was hindered by the persistent strength of the dollar. The recent sharp rise in the yen had unsettled risk-driven markets and unwound a carry trade that favored speculative assets like crypto.
Bitcoin Boosted by Rate Cut Expectations
The leading cryptocurrency surged in the past two days following Powell’s remarks, indicating a looming interest rate cut. Market participants are now anticipating a rate cut in September, with uncertainty over whether it will be a 25 or 50 basis point reduction.
Friday’s release of inflation data, the Fed’s preferred gauge, is expected to influence the decision on rate cuts. Lower interest rates are generally favorable for speculative assets such as crypto as they increase liquidity for investments in the sector.
RFK Endorses Trump, Positive Outlook for Crypto Regulation
Independent presidential candidate Robert F. Kennedy Jr, known for his pro-crypto stance, suspended his campaign and threw his support behind Republican nominee Donald Trump, who also favors crypto-friendly policies.
This development led to gains in crypto markets amid speculation that Trump could secure a victory over Democratic nominee Kamala Harris, potentially resulting in more favorable regulations for cryptocurrencies.
Trump has been vocal about his support for crypto during his campaign and recently spoke at a Bitcoin conference.
Crypto Market Update: Altcoins Dip After Weekend Rally
Following a weekend rally cooling off, most altcoins saw a decline as markets awaited further signals on U.S. interest rate cuts.
The second-largest token, Ethereum, fell 1% to $2,735.15, while Ripple (XRP), Litecoin (LTC), and Cardano (ADA) traded within a flat-to-lower range.
Dogecoin (DOGE) experienced significant losses, dropping by 5.8%, while meme token Shiba Inu (SHIB) fell by 1.7%.
Analysis: The recent fluctuations in cryptocurrency prices are largely influenced by market expectations of potential interest rate cuts by the Federal Reserve. Lower interest rates are generally positive for speculative assets like cryptocurrencies, as they increase available liquidity for investing in the sector. Additionally, political developments, such as endorsements from key figures like Robert F. Kennedy Jr and the regulatory outlook under different presidential candidates, can also impact crypto markets. Investors should closely monitor these factors to make informed decisions about their cryptocurrency holdings and strategies.