Bitcoin fell on Monday as the market generally expected the Federal Reserve to cut interest rates later this week.
The biggest digital asset fell 2.8% on Monday, then recovered some of its losses and reported $58,655 at 08:00 a.m. New York time. Other coins, including the second-ranked Ether and the meme crowd's favorite Dogecoin, also fell.
America's first interest rate cut in more than four years will indicate a more relaxed financial environment, which is generally beneficial for high-risk assets such as cryptocurrencies. However, investors are uncertain about the extent of the Fed's interest rate cut on Wednesday, and how the market will react to the latest predictions from Fed officials — the so-called bitmap and Federal Reserve Chairman Jerome Powell's latest press conference speech.
“Interest rate cuts are less important than the signals sent by Powell's press conference and the latest bitmap,” said Sean McNulty, head of trading at liquidity provider Arbelos Markets. “If the guidance and press conference are clearly dovish, we expect Bitcoin to outperform.”
Bitcoin rose 10% in the 7 days ending Sunday, the biggest weekly gain since July. This may reflect a rise in bets on the Fed cutting interest rates by 50 basis points. The market currently expects Federal Reserve officials to cut interest rates by at least 25 basis points at the upcoming policy meeting.