Fed’s ‘juice’ into crypto has analyst eyeing ‘trimming’ opportunities
According to a crypto analyst, the United States Federal Reserve’s move to lower interest rates was already priced into the crypto market, signaling that now might be the time to consider potential selling opportunities.
“The Fed put has also been anticipated by rate markets: in a sense, last week, the Fed was catching up with market expectations,” blockchain analytics firm Nansen principal research analyst, Aurelie Barthere, wrote in a Sept. 23 report shared with Cointelegraph.
Having ‘skin the game makes sense,’ says Barthere
“Keeping crypto allocation or skin in the game makes sense as the Fed has just given more juice to this bull market. But a lot is already in the price of risk assets,” Barthere added.
She explained that Nansen’s “comfortable” strategy is “trimming crypto allocation on rallies” given the “asymmetry to the downside.”
Following the Fed announcing the rate cut, the market sentiment quickly turned positive per the Crypto Fear and Greed Index .
The Crypto Fear & Greed Index. Source: Alternative.me
On Sept. 25, the index, which is a multifactorial measure of crypto market sentiment, climbed to a “Greed" score of 59, a 14-point increase since the Fed announced a 50 basis points rate cut on Sept. 18, when it was at 45 in the “Fear” zone.
BTC price holds above crucial $60K level
Bitcoin’s ( BTC ) price quickly reacted to the announcement . Following the Fed’s decision on Sept. 18, it surged past $60,000 for the first time since Aug. 30, and came close to retesting $65,000 several times within the following seven days.
Bitcoin reached $64,751 on Sept. 25. Source: TradingView
At the time of publication, Bitcoin is trading at $63,759, according to TradingView data .
Related: Bitcoin price action ‘tough to call’ after Fed rate decision — Zerocap
The Fed’s decision marked t he first rate cut since March 2020, when the Fed reduced rates in response to the COVID-19 outbreak.
Before the announcement, BitMEX co-founder Arthur Hayes argued at Token2049 in Singapore that the Fed rate cut will likely drive a market drop because it will “narrow the interest rate differential between the US dollar and the Japanese yen.”
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