Bitcoin's price experienced a slight drop on Monday after a weekend rebound lost momentum, but the cryptocurrency remained close to a near one-month high due to increasing optimism surrounding potential interest rate cuts.
Other cryptocurrencies also saw a retreat after significant gains since Friday, following remarks from Federal Reserve Chair Jerome Powell indicating potential rate cuts. The weakening dollar, which hit a 13-month low, also contributed to the rise in crypto prices.
Bitcoin fell by 0.3% to $63,952.7 by 01:59 ET (05:59 GMT).
Despite the positive momentum, further gains in Bitcoin were constrained by the continued strength of the US dollar. The recent appreciation of the yen had caused volatility in risk-driven markets, affecting speculative assets like cryptocurrencies.
Bitcoin's Surge Linked to Expectations of Rate Cuts
Following Powell's comments, Bitcoin experienced a significant increase in value over the past two days. This surge was triggered by expectations of an imminent interest rate cut, with markets now anticipating a rate reduction in September. There is uncertainty, however, about whether the cut will be 25 or 50 basis points.
The upcoming data on inflation, which is the Fed's preferred indicator, will likely influence the decision on rate cuts. Lower interest rates typically benefit speculative assets like cryptocurrencies by freeing up more liquidity for investment in the sector.
RFK's Endorsement of Trump Boosts Crypto Market
Independent presidential candidate Robert F. Kennedy Jr., known for his pro-crypto stance, suspended his campaign and threw his support behind Republican nominee Donald Trump, who also supports cryptocurrencies. This move led to gains in the crypto market amid speculation that Trump could win against Democratic nominee Kamala Harris, potentially resulting in more favorable regulations for cryptocurrencies.
Trump has consistently shown support for cryptocurrencies and recently spoke at a Bitcoin conference, further boosting confidence in the sector.
Altcoins Dip After Weekend Rally
While Bitcoin remained relatively stable, most altcoins saw a decline as the weekend rally subsided and investors awaited more clarity on US interest rate cuts. Ethereum, the second-largest cryptocurrency, fell by 1% to $2,735.15, while other altcoins like Litecoin, Dogecoin, and Shiba Inu experienced minor losses or remained flat.
Overall, the cryptocurrency market continues to be influenced by macroeconomic factors like interest rates and political developments, highlighting the importance of staying informed and monitoring market trends.