Summary

  • The 4-hour chart appears more bullish and could result in Bitcoin going over $10,500 in the next day or so. 
  • To breathe life into the short-term bullish outlook, Bitcoin prices have to peak over $11,120. 
  • The rate cut recently posted by the U.S. Fed could be a good thing for BTC long-term, according to experts. 

The U.S. Federal Reserve posted the first cut in its rates in the past 10 years and this has resulted in moderate gains for bitcoin (BTC). 

The current market value of the leading cryptocurrency is trading on Bitstamp at $9,950, which is a 2% increase over the last 24 hours. 

The Fed announced that on Wednesday it would cut interest rates by 0.25% to provide padding to the economy from a slowdown worldwide and existing trade tensions. Since the massive financial collapse of 2008, this has been the first time the Fed cut interest rates. Since the introduction of bitcoin in 2009, this has also been its first rate cut.

In the hours before the announcement by the Fed at 18:00 UTC, BTC increased to $10,000, a $200 plus increase. As per the Bitstamp data, and even more important, although it reached a $10,172 high, the cryptocurrency stayed bid in the hours that followed. 

As a result of the rate cut by the Fed, this appears to have shown investors BTC has added a bid..

Bitcoin Boom?

Those who monitor BTC feel that it will benefit from the Fed’s rate cuts since this reduces the currency’s yield. Moreover, rate cuts that lead to liquidity inserted into the economy, results in inflation and a reduction in the currency’s purchasing power. 

In other words, as the interest rates fall, there isn’t any good reason to keep U.S. currency. Alan Silbert, INX Trading Platform’s executive managing director made this observation. 

Silbert thinks that in the not too distant future, there will be further rate cuts by the Fed. However, yesterday, the central bank didn’t state that they would be doing any such rate reductions. 

Bitcoin mining reward is halving in under 12 months as the Fed announces rate cuts. They are doing this to minimize inflation by not incentivizing rewards for block chain mining by half every four years.

The monetary plan of BTC is on a predetermined path which states that every four years, its supply will be halved. 

There will be an even bigger gap in the monetary policy if the Fed chooses to do a full-scale easing cycle, as Silbert forecasts. This will bolster the appeal of bitcoin as a store of value and could strengthen a bull market. 

Over the next 24 hours, bitcoin is looking to explore the important benefits of the $10,500 threshold.

BTC surpassed the $10,000 mark and in doing so, validated the seller exhaustion indicated by the long-tailed doji produces on July 28 on the 4-hour chart. 

That bullish doji turnabout suggests that the latest peaks over $13,000 from the sell-off is at an end and is actually the least resistant route would be to the higher region. A bullish reversal was also revealed by the confirmation yesterday of a descending triangle breakout. 

It should be noted that buying volumes increased after the price breakout. Since July 19, the highest green volume bars were produced in the 4 hours before 16:00 UTC. 

Therefore, it is possible that cryptocurrency could reach $10,500 in the next few days on the 50-day moving average. But, the forecast according to the daily chart may go bullish at the point BTC invalidates the bearish lower-highs trend if it goes over $11, 120.