New York — Bitcoin (BTC) has made an impressive recovery, recovering nearly half the losses it sustained from its October crash. On Monday, BTC crossed back above $109,000 thanks to growing expectations that an interest rate cut will occur from the U.S. Federal Reserve.
Market Recovery Gains Impetus
After experiencing an abrupt decrease to below $100,000 earlier this month, Bitcoin has seen its value slowly rebound over the course of this month. Analysts credit its rise mainly to renewed risk appetite and shifting investor sentiment toward U.S. monetary policy as contributing factors.
Traders have increased their expectations of a Federal rate cut before the end of 2018, an action which often weakens the U.S. dollar and boosts alternative assets like Bitcoin. According to CME FedWatch data, market odds of such an event occurring have reached 95% – an indication of strong expectations about policy shift.
Macroeconomic Factors Supporting Bitcoin
Bitcoin’s rebound coincides with larger financial market trends. Equities have advanced, bond yields have dipped and the U.S. dollar index has fallen, all indicative of markets positioning for less restrictive monetary environments.
“Bitcoin’s rally reflects an increase in confidence that the Federal Reserve will soon ease policy,” according to one market strategist. When borrowing costs drop, investors tend to increase risk exposure – and in this respect Bitcoin often benefits.
Geopolitical instability and inflation concerns have furthered Bitcoin’s appeal as an investment vehicle. Many institutional investors view Bitcoin as an essential store of value during periods of monetary policy transition.
Improved Technical Picture.
On a technical front, Bitcoin has broken through short-term resistance levels to signal further bullish momentum. Analysts note that BTC has recouped approximately 45% of its October losses and may be positioning for another surge higher.
“Buyers are returning,” according to one crypto analyst. If Bitcoin manages to stay above $108,000 for any extended period of time, we could see another push toward $115,000 over time.
Altcoins Are Following in Bitcoin’s Footsteps
Bitcoin’s recent recovery has also had an immediate positive effect on the larger cryptocurrency market, with Ether (ETH), Solana (SOL), and other major altcoins posting gains of 3-7% within 24 hours – signaling broad market strength. Total crypto market capitalization has surged past $100 billion since recovery began, signifying widespread market strength.
Outlook Remains Cautiously Positive
Although momentum has improved, analysts warn of possible volatility resurfacing if the Federal Reserve sends conflicting signals in coming weeks. Traders are closely following economic data releases such as inflation and employment reports that could dictate its next moves.
Bitcoin’s strong rebound has provided investors with comfort after an uncertain month. Should rate-cut expectations intensify further, the leading cryptocurrency may experience further gains by year’s end.
