The cryptocurrency market experienced mixed trading on Wednesday evening, largely influenced by the Federal Reserve’s (Fed) announcement of potential interest rate cuts in the upcoming year.

What Happened: Bitcoin witnessed a significant rebound, surpassing $43,000 on Wednesday, and again back to levels below $43k. This marks the first time since Monday’s flash crash, which, in turn, uplifted the overall crypto market.

The Federal Reserve, during the December Federal Open Market Committee (FOMC), maintained the rate at a range of 5.25%-5.5%. However, they projected a gradual reduction in the rate, with an expectation of reaching 4.6% by the end of 2024. This projection indicates the possibility of approximately three 25-basis point cuts.

Crypto-related stocks experienced significant gains during the trading session. Notably, the crypto exchange Coinbase (COIN) closed nearly 8% higher, while MicroStrategy (MSTR), led by Michael Saylor, saw a gain of 5%. Furthermore, the U.S.-listed bitcoin miners Marathon Digital (MARA), Riot Platforms (RIOT), and CleanSpark (CLSK) increased by a range of 8% to 16% throughout the day. 

Top Gainer (24 Hour)

The global crypto market cap has reached $1.54 trillion, marking a 2.28% decrease in the last 24 hours.

The Dow Jones Industrial Average reached a new high on Wednesday, driven by the Federal Reserve’s indication of multiple interest rate cuts in the coming year. 

During the Fed’s meeting, they acknowledged the easing of inflation over the past year and officially revised their inflation forecast for 2024, projecting a rate of 2.4% instead of the previous 2.6%.

As a result of the Fed’s dovish outlook, bond yields and the U.S. dollar index (DXY) experienced significant decreases, which in turn led to a broad-market rally for various risk assets, including stocks and cryptocurrencies.

The S&P 500 experienced a surge of 1.37% in its value, reaching a session high of 4,707.09. Similarly, the Nasdaq Composite also saw a substantial increase, climbing by 1.38% and reaching a value of 14,733.96.

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Analyst Notes: Cryptocurrency analyst Michael Van de Poppe said, “FOMC is done, dovish stance and most likely rate cuts + the high on the interest rates is in.”

For Bitcoin, he said, “risk-off before FOMC took place. Bounce back upwards and I think the trend is going to continue going up. My overall target for this pre-spot ETF run is $47-50K.”

Eli Taranto, Executive Director at EQI Bank said, ” BTC seems to reflect the true state of the global economy, which is of course, all about investor confidence in a more integrated world. With the US on a more solid footing according to recent economic data, the global economy seems to be on a more uncertain path. For one reason or another BTC has started to reflect this, as investors were inspired by US figures but are cautious of the overall state of the world’s economic drivers.”

He added, ” We are seeing investors take profits and, surprisingly, the traditional influence of US data dissipating from this mini bull run pretty quickly. As predicted prior, BTC is reaching the lower levels, and it is likely to continue to decline with slight support from the Santa Rally. $38-40k a distinct possibility. Interestingly BTC investors seem to have gotten right, as the UK economy delivered an unpleasant surprise and contracted 0.3%. BTC may continue to surprise us as an emerging benchmark.”

Pseudonymous analyst, The Flow Horse, said on X that there seems to be a bullish sentiment towards Bitcoin and cryptocurrency among most market participants.

“I am cautious about everyone taking just yesterday’s long liquidations as a signal to be very bullish again when we are on the cusp of what should be a major sell-the-news event. Thinking the trap is being set.” 

According to Santiment, a crypto analytics firm, said, “November CPI data showed US Core inflation rose by 0.3% in the month, while the YoY inflation rate is  3.1%. This will make for volatile crypto prices for now. A good sign is that bear market mentions are high, and FUD typically leads to bounces.”

Photo by FellowNeko on Shutterstock

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