Bitcoin stabilized after a sharp drop on Wednesday, as cryptocurrency markets found themselves caught between escalating trade tensions between the United States and China and growing confidence that the Federal Reserve would cut interest rates in October. This is reported by UNN with reference to Investing.com.
Details
The world's largest cryptocurrency fell to $109,000 on Tuesday before recovering somewhat, and by 01:30 AM ET (05:30 GMT) was trading 0.2% lower at $112,292.5.
Renewed trade tensions between the US and China have been the biggest concern for Bitcoin in recent sessions, with the cryptocurrency falling to $103,000 during a sudden weekend crash.
Although the coin recovered sharply from its initial losses, it remained significantly below its recent all-time high of over $126,000. Bitcoin and cryptocurrency markets received some support from comments by Federal Reserve Chairman Jerome Powell on Tuesday.
Powell warned of a potential end to the Fed's quantitative tightening monetary policy, which largely struck markets as "dovish." The Fed chairman also noted growing uncertainty about the US economy, especially amid the ongoing government shutdown.
Powell's comments fueled growing confidence that the Fed would cut rates at its meeting in late October. Markets are pricing in a 99.6% chance of a 25 basis point cut, compared to 97.4% seen last week, as shown by CME Fedwatch.
Coinbase Global Inc (NASDAQ:COIN) said on Tuesday that it had invested an undisclosed sum in Indian cryptocurrency exchange CoinDCX as part of its efforts to strengthen its position in India and the Middle East.
CoinDCX separately stated that the investment valued the exchange at $2.45 billion, significantly higher than the less than $1 billion valuation reported earlier this year. The exchange also said that Coinbase has been an investor in CoinDCX since 2020.
Previous reports suggested that Coinbase was interested in acquiring CoinDCX. The American cryptocurrency exchange recently received approval to provide services in India, but has largely lagged behind competitors such as Binance in establishing itself in the world's largest cryptocurrency user base.
Recent data showed that India leads the world in cryptocurrency adoption, with over 100 million holders in the country as of the end of 2024.
On Wednesday, cryptocurrency prices generally rose slightly as risk appetite improved after Powell's comments.
The world's No. 2 cryptocurrency Ether rose 1% to $4,111.32, while XRP fell 0.2% to $2.5016.
Solana and Cardano rose 2.4% and 0.4% respectively, while BNB fell 3.5%.
Among meme tokens, Dogecoin and $TRUMP rose 0.5% each.
Recall
The sharp fall of Bitcoin from a record $126,000 to $103,000 was triggered by the announcement by the administration of US President Donald Trump of a new package of tariffs against Chinese imports. This caused a cascade of liquidations in the cryptocurrency market totaling a record $19 billion.
Fintech expert and co-founder of Concord Fintech Solutions Olena Sosiedka then explained that such a reaction of the crypto market indicates its deep integration into global financial processes.
The cryptocurrency market no longer exists in a vacuum. It is already integrated into the global financial market and is increasingly reacting to the same factors as traditional assets. If investors expect a slowdown in the global economy due to trade restrictions, they reduce positions in everything that has high risk, including crypto.
She also noted that the fall was short-term, caused by the "risk-off" effect, and in the short term, Bitcoin could consolidate in the range of $110,000–$125,000.