Bitcoin Holds Rate-Drop Gains, But Analysts Say $60,000 Still a Critical Battleground

Bitcoin broke through the $62,000 mark on Thursday morning, hitting $62,190, a day after the Federal Reserve announced a decisive rate cut.

Meanwhile, Ethereum, while up 5% to $2,435, underperformed Bitcoin, seeing only a 1% increase over the same two-week period.

This see-sawing Bitcoin price action follows a period of volatility triggered by the Fed’s interest rate decision yesterday. Initially, Bitcoin spiked to $61,300 before retreating to $59,400. However, bullish momentum quickly took over, pushing the price to $62,500 before pulling back slightly.

As the cryptocurrency market has surged with Bitcoin, it has triggered substantial liquidations. Crypto derivatives traders saw $204.3 million worth of contracts forced into liquidation in the past 24 hours, according to data from Coinglass. Of that, $130.5 million were short positions (betting against prices), while $73.8 million came from long positions, indicating a tilt in the market as prices have surged.

The Federal Reserve’s rate cut, the first in more than four years, surprised many Wall Street analysts. Most analysts had expected a more modest 25 basis point cut, but the larger 50 basis point cut signals a firmer monetary policy easing strategy, in line with investors’ hopes for faster action amid lingering economic uncertainty.

In a note sent to DecryptAlex Kuptsikevich, senior market analyst at FxPro, said the increased risk appetite in the markets following the Fed decision helped cryptocurrencies reach record highs over the past three weeks.

The cryptocurrency market has been on a downward trajectory since mid-March, and only a break above recent peaks of $2.25 trillion could change that trend, he said.

“The downtrend has been in place since March, and the previous peak of around $64,000 roughly coincides with the 200-day moving average. We assume that Bitcoin could encounter serious resistance at this level, which would allow it to cross the finish line,” Kuptsikevich said.

Chris Aruliah, head of institutional at Bybit, said that historically, a rate cut has often led to an inflow of capital from banks into the stock market, as lower interest rates lead to more investment in riskier assets, including digital currencies.

However, Aruliah also warned of potential challenges posed by economic uncertainty and market fluctuations. Additionally, on-chain data also suggests that Bitcoin’s price action could depend on the behavior of holders in the short term.

CryptoQuant’s analysis highlighted that the average purchase price of Bitcoin holders who held their securities for 1-3 months has historically acted as a key support or resistance level.

Talk with DecryptAvinash Shekhar, Co-Founder and CEO of Pi42, focused on Bitcoin price dynamics around the critical $60,000 level.

“Short-term holders have been selling since August, indicating a potential price floor, while long-term holders are holding support above $60,000. This has created a tug-of-war between the bulls and bears,” Shekhar said.

He added that further rate cuts could propel Bitcoin higher, making the $60,000 level a crucial battleground. “A top above $62,000 may usher in bullish momentum, while a break below $60,000 could extend selling pressure.”

Edited by Stacy Elliott.