Bitcoin May Rise with S&P 500 After Fed Rate Cut
Bitcoin (BTC) could gain value following a possible interest rate cut by the Federal Reserve. The S&P 500 and Bitcoin have shown a positive correlation recently. Investors expect the Fed to lower rates by 25 basis points on Wednesday.
JPMorgan Sees S&P 500 Gains After Rate Cuts
JPMorgan says the S&P 500 usually gains 15% over the next year after a Fed rate cut during a market rally. This outlook is based on past data when the index was near record highs. However, the S&P 500’s short-term performance after rate cuts can be mixed. Stocks fell in about half of these cases within the first month.
The CME FedWatch tool shows a 96% chance of a 25 basis point cut on Wednesday. JPMorgan called any short-term volatility after the cut a “long-term buying opportunity.”
Bitcoin’s Recent Trends and Market Sentiment
Bitcoin often moves with the stock market. In 2020, both Bitcoin and the S&P 500 dropped after emergency Fed rate cuts but recovered quickly. Bitcoin hit new highs by the end of that year.
In 2023, the S&P 500 rose 26%, while Bitcoin gained 147%. So far in 2024, the S&P 500 is up 24%, and Bitcoin has surged 135%. Bitcoin recently passed the $116,000 mark, rising from $108,000 at the start of September.
Data from CryptoQuant shows Bitcoin inflows to exchanges have dropped to 25,000 BTC, a one-year low. The average deposit size has also fallen by half since July. This suggests holders are less willing to sell.
US spot Bitcoin ETFs saw $2.34 billion in net inflows last week. This points to growing positive sentiment ahead of the Federal Open Market Committee (FOMC) meeting.
If the Fed cuts rates, Bitcoin could continue its upward trend. On Wednesday, Bitcoin rose 1% in the Asian session, trading around $116,500.
