Bitcoin [BTC] and US equities experienced a drop during Monday’s intraday trading session on September 30th. BTC witnessed a 3% decline, reaching $63,000, coinciding with comments made by Federal Reserve Chair Jerome Powell regarding expectations for rate cuts.
Speaking at the National Association for Business Economics conference in Nashville, Powell indicated that he had no specific preference for the pace of interest rate reductions, foreseeing two further cuts of 25 basis points each before the year ends.
“If the economy progresses as anticipated, there would be two more rate cuts by the end of the year, totaling a half-percentage point reduction.”
Market Adjusts Expectations for Fed Rate Cuts
Previously, the market had anticipated an aggressive 50 basis point cut in November, similar to the move in September.
Following Powell’s statements, interest rate traders currently place higher probabilities on a 25 basis point cut at 61.8%. In contrast, the likelihood of a 0.50% cut decreased to 38.2% from the 53% reported on September 27th.
This change sparked a shift in sentiment at the start of the new week, especially with significant US labor data updates on the horizon. The demand for BTC in the US transitioned from positive readings on Friday to a negative stance on November 1st, according to the Coinbase Premium Index.
Compared to the nearly $500 million daily influx seen in US spot BTC ETFs last Friday, these products only recorded $61.3 million on September 30th.
Nonetheless, the $63,000 level may serve as crucial support in the short term. Notably, it has maintained its role as a support level since mid-September and is the realized price for short-term holders (STH), as highlighted by CryptoQuant.
At current rates, BTC is valued at $63,900 amidst important updates on US labor statistics.
Another potential positive driver could be a growing indication of the end of the Federal Reserve’s quantitative tightening (QT) policy as more institutions utilize the Fed’s Repo facility, injecting additional liquidity and enhancing the appeal of risk assets.
However, escalating geopolitical tensions in the Middle East may pose a challenge to BTC’s expectations for a positive October trend, warranting close monitoring.