Markets
Gold Futures Rise Amid Fed Rate Cut Optimism Will Crypto Market Reflect Recovery?
Gold futures saw a significant rise, rising 0.5% to $2,381 per troy ounce as US Treasury yields fell. This increase is largely attributed to greater expectations of a Federal Reserve interest rate cut. This follows weak US retail sales data on Tuesday and inflation approaching the Fed’s target. Consequently, netizens are speculating about a potential recovery for Bitcoin (BTC) and the entire crypto market.
Gold Vs Crypto Market
SP Angel analysts noted in a report that these economic indicators raised hopes for a rate reduction. Friday’s PPI also increased optimism surrounding a Fed rate cut. Historically, gold prices have an inverse relationship with interest rates, as higher rates lessen the appeal of non-interest-bearing assets like the gold.
Furthermore, ongoing conflicts in the Middle East are driving investors towards safe assets, further supporting gold prices. At the same time, the silver market is also recording gains, with London Bullion Market Association (LBMA) silver prices increasing 2.6% to $30.23 per ounce, in line with gold’s upward movement.
In contrast, the crypto market is currently facing bearish sentiments. Bitcoin fell to $64,000, leading the decline among other major cryptocurrencies such as Ethereum (ETH), Solana (SOL), XRP and LayerZero (ZRO). Despite the overall negative trend, Dogecoin (DOGE) managed to remain stable.
The global crypto market capitalization has decreased by 0.94% in the last day, now standing at $2.34 trillion. Despite the drop in market value, the global crypto market volume increased by 15.23% to $69.76 billion. Meanwhile, prominent market commentator Peter Schiff highlighted on X that Bitcoin is down 14% since March 14 despite buying from 11 Spot Bitcoin ETFs.
However, he highlighted that gold rose 10% in the same period. Furthermore, he highlighted that investors who sold their gold ETFs to buy Bitcoin ETFs now face a 24% loss. Schiff also questioned how long it will take for them to realize their mistake.
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Will the crypto market recover?
Bitcoin is currently at a critical juncture, with the risk of a prolonged correction from its recent high of $70,000 looming. The cryptocurrency is precariously close to key support at $60,000. As market instability increases, irrational panic-driven selling could worsen the situation, potentially leading to a significant crash, with altcoins likely to follow suit.
The outlook for Bitcoin is bleak, with the largest digital asset at risk of falling to $50,000 before potentially recovering in the second half of 2024. Altcoins have suffered similarly, with Ethereum struggling to maintain support at $3,500, and Solana is at risk of falling below $130 if downtrends continue.
Currently, Bitcoin’s dominance is 51.2%, while Ethereum holds 17.4%. The enthusiasm seen in the market in May waned, with Bitcoin bulls pushing the price from $56,000 to nearly $72,000 before the momentum stalled.
Furthermore, although the approval of Spot Ethereum ETFs in the US boosted sentiment and took the fear and greed index to 74, recent performance has been disappointing. Furthermore, the Federal Reserve maintains an aggressive stance on rate cuts despite the reduction in inflation. This was a key factor in the recession.
Furthermore, Bitcoin miners are reportedly capitulating following the April halving, which reduced mining rewards from 6.25 to 3.125 BTC per block. This increase in selling pressure, combined with negative sentiment and weakening support levels, suggests a challenging period ahead for Bitcoin and the broader crypto market.
Read too: Breaking: Standard Chartered Becomes First Bank to Launch Spot Bitcoin, Ethereum Trading