Market Rumor Sparks Gold Record, Bitcoin Soars Above $59K

The prices of other assets, including stocks and spot gold, have skyrocketed, with the price of gold reaching a new high of over $2,580 per ounce.

The rebound in most assets is widely attributed to the decline in the US dollar, as rumors of a potential 50 basis point interest rate cut by the Federal Reserve have increased.

Bannockburn Global Forex Chief Market Strategist Marc Chandler said, "Today, the dollar is falling against almost all world currencies because speculation is growing that the Federal Open Market Committee meeting next week will still cut interest rates by 50 basis points."

"In the derivatives market, this possibility is at its highest in weeks.

The apparent trigger is clearly a news report by a journalist, which is believed to have been used by some Federal Reserve officials to facilitate communication.

Some former Federal Reserve officials also seem to support the half-percentage-point move."

He added, "Others believe that low PPI components confirm the weakness of the personal consumption expenditure deflator."

"The possibility in the Fed funds market fell from nearly 33% at the end of last weekend to less than 20% at Wednesday's close.

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After CPI, PPI, and what some believe to be a story fabricated by the Fed, the possibility is now slightly above 45%."

Chandler said, "Nevertheless, the market expects a reduction of about 115 basis points this year."

"This is hardly a change from last week's settlement.

Today's import and export prices and the preliminary results of the University of Michigan's September survey are unlikely to change this."

So far, the decline in the DXY has benefited gold and stocks, but cryptocurrencies have hardly reacted to this development, indicating that digital asset traders are taking a wait-and-see attitude.

FxPro Senior Market Analyst Alex Kupcsikevich noted, "The cryptocurrency market value has changed little over the past 24 hours, falling by 0.1% to $2.03 trillion."

"Despite the sentiment index rising by 1 point to 32 on Friday, it is still in the 'fear' range."

"Bitcoin has found a balance between buyers and sellers, staying at $58,000," he added.

"The most active buyers seem to have temporarily turned to gold and stocks.

The daily chart shows a series of higher intraday highs, indicating bullish dominance."

According to TradingView analyst TradingShot, although Bitcoin has so far responded little to the decline in DXY, it's only a matter of time before BTC rises.

He said, "A year ago (September 25, 2023), we published a comparative analysis of Bitcoin and the US Dollar Index (DXY)."

The analysis outlined their "natural negative correlation."

"BTC immediately rose to an impressive rebound from October 2023 to March 2024, just as DXY was rejected at the top of its Megaphone pattern."

He added, "We believe it is useful to update this chart a few days before the Fed cuts interest rates for the first time in years next Wednesday."

TradingShot said, "As mentioned above, this correlation mainly indicates the negative nature between these two financial assets, but also involves other parameters."

"You can see that from late January 2024 to mid-March 2024, DXY began to rise, but BTC did not fall.

Instead, it had a crazy rebound, which was entirely due to the launch of Bitcoin ETFs."

He observed, "As this move cooled down, the market began to correct the fervor of the rebound.

Although DXY began to fall sharply in late June, due to the strong adjustment of the stock market, BTC did not rise but entered a range of 50,000 to 70,000."

"So, an obvious question is 'What's next for Bitcoin?'"

he asked.

"Well, as you are aware, this can only be answered by the stock market and the trend of DXY.

BTC is currently at the 1W MA50 (blue trend line), while DXY is at the 1W MA 200 (orange trend line)."

TradingShot pointed out, "Technically, if DXY rebounds on the 1W MA200, Bitcoin should fall, and vice versa.

If DXY breaks through the 1W MA2000 (which would be the first time since January 10, 2022), Bitcoin should rebound."

"However, this also depends on the trend of stocks."

He said, "Therefore, we believe that if the stock market rises, BTC will follow it up (unless it accelerates and breaks through the resistance level of 107.370)."

"If DXY rebounds and the stock market rises, BTC should rebound, but only moderately.

If DXY breaks through the 1W MA200 during the stock market recovery, we expect the rebound to be much higher than most people expect."

"On the other hand, further declines in the stock market, coupled with a rebound in DXY, will translate into aggressive selling of Bitcoin," he warned.

"However, if the stock market continues to fall when DXY breaks through the historic 1W MA200, we expect the consolidation of Bitcoin from July to September to extend, so the trend should be horizontal until one of the parameters/conditions changes."