Bitcoin could bounce back to $ 112,000 if the Fed lowers rates!

Under tension in the face of an uncertain economy, the markets are watching for each gesture of the federal reserve. Far from being limited to traditional assets, its decisions now strongly influence the Crypto market. As a potential surprise drop in rates, Bitcoin retains its breath. Such a monetary signal could propel the first crypto to new heights, nourishing the anticipations of a historic rally.

Expectations around the Fed and hopes of the Crypto market

After a third consecutive maintenance of the rates in May, the markets reacted in a contrasting manner, which testified to an increased nervousness in the face of the signals of the American central bank.

As the decisive meeting of June 18 approaches, the financial markets are mostly expecting a status quo of the federal reserve. According to CME Fedwatch Tool data97.5 % of investors anticipate the maintenance of guiding rates in the current range of 4.25 % to 4.50 %.

However, an alternative hypothesis gains in traction: that of an earlier monetary adjustment than expected. For Carlo Pruscino, analyst at CMC Markets, a surprise drop in rates would have a direct impact on cryptos. He has clarified ::

If these next two drops in rate are much earlier than expected, this will greatly influence future developments in the price of assets and other cryptos.

It even advances a symbolic target level for traders: “The bullish objective that traders have in mind for Bitcoin is $ 112,000, a threshold perceived as a key psychological level”.

To better understand this bullish projection, several technical and contextual elements come into play:

• The historic level: Bitcoin reached $ 111,970 on May 22, bordering on a symbolic summit before a correction;

• The psychological threshold of $ 112,000: this level is now perceived as a rocking point for the market, capable of attracting new volumes in the event of crossing;

• The current momentum: The BTC displays a positive performance of +6.72 % over the last 30 days, which feeds speculation around a rebound in the event of a flexible monetary signal;

• The sensitivity of the Crypto market to the Fed policy: historically, the rate drop cycles benefited speculative assets, including Bitcoin, due to a more favorable liquidity environment.

The hypothesis of a post-feed rally is therefore based on a precise alignment between monetary surprise and appetite for risk. However, this scenario, as attractive as it is, remains subject to many macroeconomic variables.

Underestimated structural brakes: the weight of macroeconomic uncertainties

If some actors bet on a positive reaction of cryptos to a possible drop in rates, other indicators confuse the cards. One of the most scrutinized elements in the short term is the US employment report.

Carlo Pruscino insists on the importance of this publication: “By approaching this statistic, we have just observed a certain weakness of economic activity in the United States. This figure must therefore be solid enough to compensate for this less favorable recent dynamic ”.

Clearly, a figure greater than expectations, for example more than 250,000 jobs created, could encourage the Fed to delay any drop in rate.

Beyond cyclical statistics, geopolitical factors complexify reading the intentions of the Fed. The commercial climate has recently been set with Donald Trump's decision to double prices on foreign steel and aluminum at 50 %.

Pruscino stresses that this instability weighs on the visibility of the Fed: “CThey have mentioned it several times in their statements, the unknown remains the pricing and commercial policy, and they need clear evidence on this subject “.

These uncertainties reduce the probability of a strong monetary gesture immediately, in the absence of readability on the economic impacts of these political decisions.

Ultimately, if an anticipated monetary easing remains a possible scenario, its realization depends on multiple factors, both economic and political. Bitcoin could benefit from it, but on condition that the signals align perfectly in particular the low macroeconomic data, the soothing of trade tensions like the agreement between China and the United States, and the return of a strong appetite for the risk. Conversely, any unpleasant surprises in the next statistics or an accentuation of international tensions could push this horizon and extend the current consolidation of the prices.