Bitcoin price doesn’t look very optimistic now as it is below $5,000 again. However, just recently after the news about the rate cut from teh Fed, it was gaining massively.
Bitcoin price went up after the U.S. Fed announced a massive rate cut. Sources say that this occurred late on Sunday as global economies were still reeling from the effects of the COVID-19 situation. It also reportedly came with a $700 billion stimulus program to protect the U.S. economy from the effects of a global economic shutdown.
Bitcoin Price Rose at Good News from U.S. Fed
Bitcoin price reportedly rose by about 7.7% from $5,182.70 to $5,582.62. Bitcoin price jumped about one hour after the Fed Open Markets Committee (FOMC) meeting. Then the price went even higher.
But quite soon BTC went down again. Traders had anticipated further losses due to the shutdown of global business.
Sources say that the meeting was originally meant to hold on Tuesday but as brought forward to Sunday. In a statement, the Fed indicated its reasons for such moves. The FOMC said:
“Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The effects of the coronavirus will weigh on economic activity in the near term and pose risks to the economic outlook. In light of these developments, the Committee decided to lower the target range for the federal funds rate to 0 to 1/4 percent. The Committee expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals”.
Bitcoin price also retreated as the bad news continued despite teh news from the Fed. The gains made at the announcement were also reversed as bitcoin prices retreated below $5,000. The stock markets are also following this trend. The crypto space also followed the lead of the first cryptocurrency. The altcoins are all down significantly since the news yesterday. Investors in most financial markets seem to be driven by Fear, Uncertainty, and Doubt (FUD). While most governments have reportedly taken action, many analysts think that more needs to be done.
The Bad News Takes its Toll
Even though the markets responded positively after the announcement, reversals were already underway. The bad news began to filter in from across the globe. Italy’s daily death count from COVID-19 is rising. Spain reported about 2,000 new cases in the virus and locked its borders. The epicenter of the coronavirus in China (Wuhan) though recorded some good news as most temporary hospitals got shutdown.
This as also driven the fears of many within global financial circles of a global economic recession. The last time the U.S. Fed slashed rates this low, in December 2008, the world was on the precipice of a recession that occurred.
While this may or may not come, the odds of a quicker recovery are higher than then. As the fundamentals of the crypto space remain sound, current price levels present a unique opportunity to buy and HODL.
As of the time of writing this report, Bitcoin (BTC) prices were at $4,883.49 (-7.5%), Ethereum (ETH) $110.28 (-10.77%), XRP $0.14 (-6.53%).
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