Bitcoin Price Surges, but Uncertainty Looms
In recent days, the price of Bitcoin experienced a significant drop on October 10th, reaching around $59,000. However, it quickly began to rise and reached near $68,000 just five days later on October 15th. Not only that, but many altcoins also saw a surge in their prices. For example, the price of SUI increased by more than 30% within a few days, while some meme coins saw an increase of over 50%.
While the bull market is certainly welcomed, there are concerns about the current cryptocurrency market. People are questioning whether the sudden surge will be sustainable and if a crash will follow.
Bitcoin’s price increase is not solely due to interest rate cuts
After reaching a low point of $59,000 on October 10th, the price of Bitcoin began to rebound. However, it is unclear what exactly triggered this surge. Just recently, the Federal Reserve indicated that its previous decision to cut interest rates by 50 basis points may have been a mistake. Some traders even bet that the possibility of further interest rate cuts will not be discussed in the next Fed meeting. It seems that the current market believes that only interest rate cuts by the Federal Reserve can provide more liquidity to the market and trigger an upward trend.
Investors need to be aware that even though the Federal Reserve did not cut interest rates from the end of last year to the beginning of this year, Bitcoin’s price still rose from around $20,000 to around $60,000. This is because injecting liquidity into the market does not necessarily require interest rate cuts. For example, when the Japanese yen has low interest rates and the US dollar has high interest rates, the interest rate differential between the two currencies is significant. If investors borrow low-interest Japanese yen and convert it into US dollars to invest in high-return US dollar assets, it is almost a risk-free transaction, which was a major factor driving Bitcoin’s bull market earlier this year.
Therefore, interest rate cuts may not necessarily bring more liquidity in the short term, and the real source of liquidity lies in the large interest rate differential between the US dollar and the Japanese yen. So if the USD/JPY exchange rate increases, indicating a widening interest rate differential, it is more favorable for the financial market. The USD/JPY exchange rate reached a low of around 140 on September 18th and has since started to rise, now approaching the level of 150. This helps explain the recent rebound in the cryptocurrency market.
As for interest rate cuts, they can indeed bring more liquidity, but unless the Federal Reserve implements large-scale interest rate cuts like during the 2021 pandemic, the short-term effects of interest rate cuts will not be significant. Moreover, interest rate cuts may cause the interest rate differential between the US dollar and the Japanese yen to shrink, which could potentially affect the upward trend in the financial market. Therefore, unless there are large-scale interest rate cuts, investors in the short term do not need to attach too much importance to interest rate cuts.
Altcoins see a general rise, could be the last bull market of 2024
Following the rise in Bitcoin’s price, many altcoins also experienced a long-awaited surge. For example, Ethereum, which has been the subject of much controversy, has recently seen its price rise from around $2,400 to around $2,600. This indicates that Ethereum’s fundamentals have not deteriorated to the point where it loses market recognition, and as long as market conditions allow, it can still experience a considerable increase in price.
In addition, the prices of public chains SUI and Aptos have also seen good increases recently. The main narrative behind the speculation of these two is “Solana’s substitution.” Although the recent gains of these two tokens are significant, investors need to be cautious of potential risks. This is because the narrative of “Solana’s substitution” itself determines that this is not a track that can be speculated in the long term. On the one hand, Solana itself has not had any major flaws or controversies. On the other hand, Solana’s ecosystem is more mature and cannot be compared to SUI and Aptos. According to the market report released by Wintermute, Solana is currently dominating token generation, with its market share rising from 60% in early September to 86%, and the weekly token generation has increased from 45,000 to 110,000. This shows that the market highly recognizes Solana, so it is questionable whether it is necessary to replace Solana. Therefore, SUI and Aptos may only be suitable for short-term trading, and the long-term investment value is yet to be seen.
About BingX
Established in 2018, BingX is a leading global cryptocurrency exchange that provides diversified products and services such as spot trading, derivatives, copy trading, and asset management to over 10 million users worldwide. BingX also regularly provides analysis tools for mainstream cryptocurrencies such as Bitcoin and Ethereum prices to meet the needs of beginners and professionals. BingX is committed to providing a trusted platform and empowering users with innovative tools and features to enhance their trading capabilities. In 2024, BingX proudly became the main partner of Chelsea Football Club, marking its first splendid appearance in the sports world.
This article is provided by the official source and does not represent the stance or investment advice of this website. Readers should conduct their own careful evaluation.
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