Bitcoin Price Dips But Holds Above $64,000 Ahead of Powell Speech

The cryptocurrency market experienced a sharp correction in the past hour, with Bitcoin shedding nearly $1,000. However, the leading digital asset has managed to maintain support above the $64,000 level, suggesting this pullback may be short-lived.

The sudden drop came just before Federal Reserve Chairman Jerome Powell was set to deliver a highly anticipated speech in Nashville, Tennessee.

Powell: Labor Market Cooling Not Necessary for 2% Inflation Target

In his remarks, Powell stated that the Federal Reserve believes further cooling of the labor market is not required to achieve its 2% inflation target. He noted that while many indicators point to a robust job market, it has shown signs of easing over the past year.

The Fed chair emphasized that “disinflation has been broad-based” and recent data suggests a sustainable return to the 2% goal may be within reach. Powell added that current economic conditions are conducive to continued disinflation, with the job market now “roughly in balance” and longer-term inflation expectations “well anchored.”

Looking ahead, Powell suggested that if the U.S. economy continues to evolve as expected, Fed policy could move toward a “more neutral stance.” This outlook could potentially fuel further gains in Bitcoin’s price.

Powell’s comments on broad-based disinflation and economic stabilization are likely to boost investor confidence in Bitcoin. A more neutral Fed stance tends to increase demand for alternative assets like cryptocurrencies amid an improving inflation outlook.

Bitcoin Rallies on Fed Pivot and China Stimulus

The latest Bitcoin rally kicked off two weeks ago following an unexpected policy shift from the Federal Reserve. The central bank cut interest rates by 50 basis points – its first reduction since the start of the Covid-19 pandemic and larger than the anticipated 25 basis point cut.

However, the more immediate catalyst for last week’s surge in both Bitcoin and global markets came from China. Reports indicated Chinese authorities were considering injecting up to 1 trillion yuan into major state-owned banks to stabilize the struggling economy.

This news sent the Shanghai Composite index soaring over 8%, on track for its best week since 2011. European markets gained around 1%, while U.S. stocks also traded higher. These global economic developments have boosted confidence in both traditional and crypto markets.

The Hang Seng Index in Hong Kong has also posted impressive gains since mid-December, with the past week marking its strongest performance since 2008. The index is now up 18% from its September low and has surged about 15% since late August, reflecting growing investor optimism in the region.

Bitcoin Surges as Gold Retreats Amid Chinese Stimulus

As Bitcoin climbed, precious metals saw significant selling pressure. Gold tumbled from record highs above $2,700 per ounce, while silver fell from its strongest levels in 12 years.

Meanwhile, interest in U.S.-based spot Bitcoin ETFs has intensified amid the cryptocurrency’s renewed price momentum. BlackRock’s iShares Bitcoin Trust (IBIT) recorded massive inflows recently, attracting nearly $185 million in new investments according to Farside Investors.

China’s central bank also made a bold move to boost economic confidence by cutting interest rates on one-year policy loans by the widest margin on record. This significant rate reduction could bolster investor sentiment and liquidity in global markets, potentially driving increased demand for Bitcoin as an alternative asset during times of economic uncertainty.

The People’s Bank of China announced it would slash the medium-term lending facility rate from 2.3% to 2% – a 30 basis point cut representing the largest reduction since the monetary tool was introduced in 2016. This aggressive measure aims to inject vitality into the Chinese economy and accelerate growth.

Markets on Alert for U.S. Jobs Data

Crypto traders are closely watching for the upcoming U.S. jobs report, set for release on October 4th. The Labor Department data will include nonfarm payrolls, unemployment figures, and hourly wage statistics for September. These indicators are crucial for assessing labor market health, which heavily influences Federal Reserve monetary policy decisions.

The report could spark increased volatility in cryptocurrency markets as traders speculate on its potential impact on Bitcoin prices, given possible shifts in Fed policy outlook.

“Uptober” Sentiment and Rate Cut Hopes Fuel Bitcoin Optimism

Wall Street economists expect nonfarm payrolls to rise by 144,000, slightly above last month’s 142,000 gain, while the unemployment rate is projected to hold steady at 4.2%. These figures take on greater significance following last week’s data showing U.S. PCE inflation moderated to 2.2%. This has fueled expectations of a more dovish Fed stance in upcoming meetings, potentially supporting market trends.

Historically, October has been a favorable month for Bitcoin and other major cryptocurrencies. This bullish sentiment is further amplified by the upcoming U.S. elections, which typically bring increased volatility and opportunities to financial markets.

Recent cooling in U.S. inflation data has revived speculation of a potential 50 basis point rate cut in November, according to the CME FedWatch Tool. This dovish policy shift could help sustain bullish momentum in crypto markets. Analysts are not only anticipating a strong “Uptober” but also forecasting a robust Q4 rally, suggesting digital assets may see increased activity in the coming months.